**EXHIBIT
      4.10**




**AGREEMENT
      AND PLAN OF MERGER**





**Dated
      as of August 16, 2007**





The
      parties to this agreement and plan of merger are BluePhoenix Solutions Ltd.
      (the
“Parent”), an Israeli corporation, ASNA Transitory Sub, Inc. (the “Sub”), a
      Texas corporation, Amalgamated Software of North America, Inc. (the “Company”),
      a Texas corporation, a committee comprised of each of Stuart Simke, Anne
      Ferguson and Phil Holthouse (collectively, the “Representative”) and the
      shareholders of the Company named at the end of this agreement (the “Principal
      Shareholders”).





The
      board
      of directors of each of the Parent, the Sub, and the Company have approved
      the
      merger (the “Merger”) of the Sub with and into the Company on the terms set
      forth in this agreement.





Accordingly,
      the parties agree as follows:





**ARTICLE
      I**





**THE
      MERGER**





Section
      1.1  The
      Merger .  At
      the
      Effective Time (as defined in section 1.2, the Sub shall be merged with and
      into
      the Company, in accordance with the Texas Business Corporation Act (the “TBCL”),
      at which time the separate existence of the Sub shall cease, and the name of
      the
      Company, as the surviving corporation in the Merger (the “Surviving
      Corporation”), shall by virtue of the Merger remain “Amalgamated Software of
      North America, Inc. **”** The
      Merger will have the effects set forth in Article V of the TBCL.




Section
      1.2  Effective
      Time of the Merger .
      The
      Merger will become effective upon the filing of a properly executed articles
      of
      merger complying with section 5.04 of the TBCL (the “Articles of Merger”) with
      the Department of State of the State of Texas (the “Department of State”) (the
“Effective Time”).





**ARTICLE
      II**





**THE
      SURVIVING CORPORATION**





Section
      2.1  Certificate
      of Incorporation .
      The
      articles of incorporation of the Sub in effect at the Effective Time will be
      the
      articles of incorporation of the Surviving Corporation, until thereafter amended
      in accordance with its terms and as provided in the TBCL.




Section
      2.2  Bylaws .
      The
      bylaws of the Sub in effect at the Effective Time will be the bylaws of the
      Surviving Corporation, until thereafter amended in accordance with its terms
      and
      as provided in the certificate of incorporation and the TBCL.




Section
      2.3  Directors
      and Officers of Surviving Corporation




(a)  The
      directors of the Sub at the Effective Time will be the initial directors of
      the
      Surviving Corporation and will hold office from the Effective Time until their
      respective successors are duly elected or appointed and qualify in the manner
      provided in the certificate of incorporation and bylaws of the Surviving
      Corporation or as otherwise provided by law.




(b)  The
      officers of the Company at the Effective Time will be the initial officers
      of
      the Surviving Corporation and will hold office from the Effective Time until
      their respective successors are duly elected or appointed and qualify in the
      manner provided in the certificate of incorporation and bylaws of the Surviving
      Corporation or as otherwise provided by law.





**ARTICLE
      III**





**CONVERSION
      OF SHARES; ESCROW;**


**ADJUSTMENT
      OF MERGER CONSIDERATION**





Section
      3.1  Exchange
      Ratio .




(a)  Subject
      to sections 3.2 and 3.3, at the Effective Time, by virtue of the Merger and
      without any action on the part of the holder of shares of common stock of the
      Company (collectively, the “Shares”), each Share issued and outstanding
      immediately prior to the Effective Time (other than any Dissenting Shares (as
      defined in section 3.3 )) (the “Outstanding Shares”) will be converted into the
      right to receive (i) the Initial Merger Consideration (as defined below), (ii)
      the Indemnity Merger Consideration (as defined below), if any, (iii) the
      Contingent Merger Consideration (as defined below), if any, and (iv) the
      Representative Escrow Consideration (as defined below), if any. The Initial
      Merger Consideration in respect of particular Shares will be paid in cash and
      without interest upon surrender of the certificate formerly evidencing such
      Shares. The Indemnity Merger Consideration, if any, will be paid in cash and
      with interest as and when specified in section 3.5. The Contingent Merger
      Consideration, if any, will be paid in cash without interest as and when
      specified in sections 3.6 and 3.7. The Representative will pay the
      Representative Escrow Consideration in cash and with interest as and when
      specified in section 10.7. The Initial Merger Consideration, the Indemnity
      Merger Consideration, the Contingent Merger Consideration, and the
      Representative Escrow Consideration are collectively referred to as the “Merger
      Consideration.” From and after the Effective Time, all converted Shares shall no
      longer be outstanding and shall be deemed to be cancelled and retired and shall
      cease to exist, and each holder of a certificate evidencing converted Shares
      shall cease to have any rights with respect to such Shares, except the right
      to
      receive the Merger Consideration in respect of those Shares, without interest
      (other than as specified in sections 3.5 and 10.7), upon the surrender of such
      certificate in accordance with section 3.2 or as otherwise provided by law.


2


(b)  The
      Initial Merger Consideration will be an amount determined by dividing (i) an
      amount equal to $4,750,000 (four million seven hundred and fifty thousand US
      dollars), reduced by the amount of the Fees and Expenses (as defined in section
      5.20), by (ii) the number of Outstanding Shares.




(c)  The
      Indemnity Merger Consideration will be an amount determined by dividing (i)
      an
      amount equal to the sum of (A) the amount delivered by the Escrow Agent to
      the
      Company pursuant to section 3.5(b), plus (B) the amount delivered by the Escrow
      Agent to the Company pursuant to section 3.5(c), by (ii) the number of
      Outstanding Shares.




(d)  The
      Contingent Merger Consideration will be an amount determined and payable
      pursuant to sections 3.6 and 3.7.




(e)  The
      Representative Escrow Consideration will be an amount determined and payable
      by
      the Representative pursuant to section 10.7.


3


(f)  Each
      Share held in the treasury of the Company immediately prior to the Effective
      Time will be cancelled and retired and cease to exist.




(g)  Each
      share of common stock, par value $0.01 per share, of the Sub issued and
      outstanding immediately prior to the Effective Time will be converted into
      one
      share of common stock of the Surviving Corporation.




Section
      3.2  Exchange
      of Certificates




(a)  Exchange
      Procedures .
      As soon
      as reasonably practicable, but in no event more than two business days, after
      the Effective Time, the Parent shall mail or otherwise deliver to each holder
      of
      record of Shares immediately prior to the Effective Time listed in schedule
      3.2(a), at the respective holder’s address set forth in schedule 3.2(a), (i) a
      letter of transmittal (which will specify that delivery of the certificates
      evidencing the holder’s Shares (the “Certificates”) will be effected, and risk
      of loss and title to the Certificates will pass, only upon delivery of the
      Certificates to the Parent) in such form and with such provisions not
      inconsistent with this agreement as the Parent may specify (including a
      provision to the effect that payment of the Merger Consideration shall be made,
      from time to time, by wire transfer to the bank account specified by the holder
      or by check mailed by first class mail to the address specified by the holder,
      as the holder may elect) (ii) instructions for use in effecting the surrender
      of
      Certificates in exchange for payment of the Merger Consideration, (iii) a copy
      of the provisions of the TCBL relevant to dissenter’s rights, and (iv) IRS Form
      W-9 or W-8, as applicable, which shall be forwarded to the Escrow Agent. Upon
      surrender of a Certificate for cancellation to the Parent or to such other
      agent
      or agents as may be appointed by the Parent, together with such letter of
      transmittal, duly executed, the holder of such Certificate will be entitled,
      not
      later than two business days following such surrender, to receive in exchange
      therefor the Merger Consideration for each Share formerly represented by such
      Certificate. The Certificate so surrendered shall forthwith be cancelled. If
      payment of the Merger Consideration is to be made to a person other than the
      person in whose name the surrendered Certificate is registered, it will be
      a
      condition of payment that the Certificate so surrendered be properly endorsed
      or
      otherwise in proper form for transfer and that the person requesting such
      payment shall have paid any transfer and other taxes required by reason of
      the
      payment of the Merger Consideration to a person other than the registered holder
      of the Shares evidenced by the Certificate surrendered or shall have established
      to the satisfaction of the Surviving Corporation that such tax either has been
      paid or is not applicable. After the Effective Time, each Certificate shall
      entitle the holder thereof only to the right to receive, upon surrender of
      the
      Certificate, the Merger Consideration in cash as contemplated by this section
      3.2 and no more.




(b)  Transfer
      Books; No Further Ownership Rights in the Shares .
      At the
      Effective Time, the stock transfer books of the Company will be closed, and
      thereafter there will be no further registration of transfers of the Shares
      on
      the records of the Company. From and after the Effective Time, the holders
      of
      Certificates evidencing Outstanding Shares shall cease to have any rights with
      respect to such Shares, except as otherwise provided in this agreement or by
      applicable law.


4


(c)  Withholding .
      The
      Parent may deduct and withhold from the Merger Consideration otherwise payable
      pursuant to this agreement to any holder of Shares such amount of Taxes (as
      defined in section 5.19) as the Parent is required to deduct and withhold under
      applicable law with respect to the making of such payment. To the extent that
      amounts are so withheld by the Parent, such withheld amounts shall be treated
      for all purposes of this agreement as having been paid to the holder of Shares
      in respect of whom such deduction and withholding was made by the Parent.




Section
      3.3  Dissenting
      Shares .
      Notwithstanding anything in this agreement to the contrary, no Outstanding
      Shares the holder of which has complied with the provisions of sections 5.11
      through 5.14 of the TBCL as to dissenter’s rights (“Dissenting Shares”) shall be
      deemed converted into and to represent the right to receive the Merger
      Consideration, and the holders of Dissenting Shares, if any, will be entitled
      to
      payment, solely from the Surviving Corporation, of the appraised value of such
      Dissenting Shares, to the extent permitted by and in accordance with the
      provisions of sections 5.11 through 5.14 of the TBCL; provided , however ,
      that
      (a) if any holder of Dissenting Shares shall, under the circumstances permitted
      by the TBCL, subsequently deliver a written withdrawal of that holder’s demand
      for appraisal of such Dissenting Shares, or (b) if any holder fails to establish
      that holder’s entitlement to rights to payment as provided in the TCBL, or (c)
      if neither any holder of Dissenting Shares nor the Surviving Corporation has
      filed a petition demanding a determination of the value of all Dissenting Shares
      within the time provided in the TBCL, such holder or holders shall forfeit
      such
      right to payment for such Dissenting Shares pursuant to the TBCL, and each
      such
      Share will not be considered a Dissenting Share but will thereupon be converted
      into the right to receive the Merger Consideration. The Company shall give
      the
      Representative (as defined in Article 10) and the Parent (x) prompt notice
      of
      any written demands for appraisal of any Shares, attempted withdrawals of such
      demands, and any other instruments received by the Company relating to
      shareholders’ rights of appraisal and (y) the opportunity to participate in all
      negotiations and proceedings with respect to demands for appraisal under the
      TBCL.




Section
      3.4  Closing .
      Subject
      to the satisfaction or waiver of the conditions set forth in Article VII, the
      parties shall consummate the closing of the transactions contemplated by this
      agreement (the “Closing”) as promptly as practicable on the date of this
      agreement. At the Closing, the parties shall take all action and execute and
      deliver all documents and instruments (including, without limitation, the
      Articles of Merger) required to effect the Merger as promptly as
      possible.




Section
      3.5  Indemnity
      Merger Consideration




(a)  At
      the
      Effective Time, pursuant to the escrow agreement dated the date of this
      agreement among the parties to this agreement and JPMorgan Chase Bank, N.A.
      (the
“Escrow Agent”) (the “Escrow Agreement”), the Parent shall deposit $2,000,000 in
      cash in the Escrow Fund (as defined in the Escrow Agreement).


5


(b)  On
      the
      earlier of February 16, 2008 or the date on which the Parent delivers to the
      Representative the 2007 Stub-Period Income Statement (as defined in section
      3.6(a)), the parties shall cause the Escrow Agent to transfer to the Company
      an
      amount equal to (i) the sum of (A) $1,000,000 plus (B) interest earned thereon
      under the Escrow Agreement, reduced by (ii) the sum of (A) the amount the Parent
      in its commercially reasonable discretion determines is necessary to meet any
      payments required to be made for Dissenting Shares under section 3.3 and any
      related attorneys’ fees and expenses, plus (B) the Estimated Claim Amount (as
      defined below), plus (C) 50% of the aggregate amount of any fees theretofore
      payable to the Escrow Agent pursuant to section 7 of the Escrow Agreement (the
      amount of such fees paid during a particular period, the “Shareholders’ Portion
      of the Escrow Fees”), plus (D) the aggregate amount of all Claims (as defined in
      section 8.4(a)) theretofore paid pursuant to the Escrow Agreement (such sum
      to
      be distributed from the Escrow Fund pursuant to this section 3.5(b) constitutes
      the “2007 Distribution”). Within five (5) business days after the Company’s
      receipt of the 2007 Distribution from the Escrow Agent, the Company shall pay
      each former holder of Outstanding Shares who shall have surrendered a
      Certificate evidencing Outstanding Shares an amount per Share determined by
      dividing (i) the 2007 Distribution, by (ii) the number of Outstanding Shares
      (the “Per Share 2007 Distribution”). Thereafter, the Company shall pay the
      respective former holders of Outstanding Shares so surrendering Certificates
      an
      amount in cash, without interest after the date of the 2007 Distribution, equal
      to the Per Share 2007 Distribution in respect of each Outstanding Share
      evidenced by the Certificates so surrendered within five (5) business days
      after
      the respective Certificates are so surrendered. For purposes of this agreement,
      the term “Estimated Claim Amount” at any time means the amount the Parent in its
      commercially reasonable discretion determines is reasonably necessary to meet
      Claims, if any, made by the Parent Indemnified Parties under Article VIII prior
      to that time.




(c)  If,
      at
      any time after **** November
      16, 2008, there are no unresolved Claims by the Parent Indemnified Parties
      under
      Article VIII, the parties shall cause the Escrow Agent immediately to transfer
      to the Company the balance, if any, then in the Escrow Fund (including interest
      earned thereon under the Escrow Agreement), reduced by the Shareholders’ Portion
      of the Escrow Fees during the period from the date of the transfer by the Escrow
      Agent under section 3.5(b) to the date of the transfer by the Escrow Agent
      under
      this section 3.5(c) (such final balance to be transferred from the Escrow Fund
      pursuant to this Section 3.5(c) constitutes the “Final Distribution”). Within
      five (5) business days after the Company’s receipt of the Final Distribution
      from the Escrow Agent, the Company shall pay each former holder of Outstanding
      Shares who shall have surrendered a Certificate evidencing Outstanding Shares
      an
      amount per Share determined by dividing (i) the Final Distribution, by (ii)
      the
      number of Outstanding Shares (the “Per Share Final Distribution”). Thereafter,
      the Company shall pay the respective former holders of Outstanding Shares so
      surrendering Certificates an amount in cash, without interest after the date
      of
      the Final Distribution, equal to the Per Share Final Distribution in respect
      of
      each Outstanding Share evidenced by the Certificates so surrendered within
      five
      (5) business days after the respective Certificates are so
      surrendered.


6


Section
      3.6  2007
      Contingent Merger Consideration




(a)  Not
      later
      than April 30, 2008, the Parent shall prepare and deliver to the Representative
      (i) a consolidated income statement for the Company and its consolidated
      subsidiaries for the period (the “Stub-Period”) commencing on August 15, 2007
      and ending on December 31, 2007 (the “2007 Stub-Period Income Statement”), and
      (ii) a report of the Parent’s chief financial officer setting forth the 2007
      Stub-Period EBIT and the 2007 Stub-Period Revenue, and, in reasonable detail,
      the calculation of the 2007 Stub-Period EBIT and 2007 Stub-Period Revenue (the
      “Preliminary 2007 Stub-Period EBIT Statement”). The 2007 Stub-Period Income
      Statement shall be prepared on a basis consistent with the basis on which the
      income statements included in the Financial Statements (as defined in section
      5.5) were prepared, except that maintenance revenue in respect of the
      Stub-Period shall not be included, except to the extent actually collected
      by
      the earlier of (i) January 31, 2008, or (ii) the date the 2007 Stub-Period
      Income Statement shall have been prepared. (b)  As
      used
      in this agreement, (i) the term “2007 Stub-Period EBIT” means the Net Profit, if
      any, in the Stub-Period, increased by the sum of the net income tax expense
      plus
      the interest expense (net of the interest income) reflected in the 2007
      Stub-Period Income Statement, (ii) the term “Net Profit” for a particular period
      means (A) the Company’s consolidated net earnings for that period, determined by
      the Parent on the basis of the 2007 Stub-Period Income Statement, and (iii)
      the
      term “2007 Stub-Period Revenue” means the consolidated revenue of the Company
      and its consolidated subsidiaries reflected in the 2007 Stub-Period Income
      Statement.




(c)  The
      Representative shall have 60 days after receipt of the 2007 Stub-Period Income
      Statement and Preliminary 2007 Stub-Period EBIT Statement (the “Objection
      Period”) to object to any item or items shown on the Preliminary 2007
      Stub-Period EBIT Statement. During the Objection Period, the Representative
      shall have access to all work papers used in the preparation of the Preliminary
      2007 Stub-Period EBIT Statement. The Representative may, during the Objection
      Period, notify the Parent in writing of any good faith objections to the
      Preliminary 2007 Stub-Period EBIT Statement, setting forth a detailed
      description of such objections and the dollar amount of each objection. If
      the
      Representative does not so object during the Objection Period, the Preliminary
      2007 Stub-Period EBIT Statement shall be final, binding, and conclusive on
      the
      parties. If the Representative so objects during the Objection Period, the
      Representative and the Parent shall attempt to resolve any such objections
      within 30 days following the Parent’s receipt of the Representative’s
      objections. If the Parent and the Representative are able to resolve all such
      objections, such resolution shall be final, binding, and conclusive on the
      parties. If the Parent and the Representative are unable to resolve all such
      objections within that 30-day period, the Parent and the Representative shall
      select and retain within five days following the end of that 30-day period
      an
      accounting firm mutually agreeable to the Parent and the Representative (or,
      if
      they cannot agree on a firm, either may request that JAMS select such firm)
      (such accounting firm, the “Arbitrator”) to resolve the disagreement. The
      Arbitrator shall be directed to resolve any items in dispute between the
      parties. The Arbitrator also shall determine how much of his fees and expenses
      shall be paid by each party. The Representative and the Parent shall (and shall
      cause the Surviving Corporation to) provide the Arbitrator full cooperation,
      and
      the Arbitrator shall perform such procedures and examine such books and records
      of the Company as it deems relevant. The Arbitrator shall be instructed to
      reach
      a conclusion regarding the disputed items within 30 days following the
      submission to him of any disagreements and, in any case, as soon as practicable
      after such submission. The Arbitrator’s resolution of the disputed items shall
      be final, binding, and conclusive on the parties. As used in this agreement,
      (i)
      the term “Final 2007 Stub-Period EBIT Statement” means the Preliminary 2007
      Stub-Period EBIT Statement, after the acceptance of it by the Representative
      or
      after its adjustment to reflect the resolution of all objections pursuant to
      this section 3.6(c), as the case may be, (ii) the term “Final 2007 Stub-Period
      EBIT” means the 2007 Stub-Period EBIT reflected in the Final 2007 Stub-Period
      EBIT Statement, and (iii) the term “Final 2007 Stub-Period Revenue” means the
      2007 Stub-Period Revenue reflected in the Final 2007 Stub-Period Net Profit
      Statement.


7


(d)  (i)  If
      the
      Final 2007 Stub-Period EBIT exceeds $791,368 and the Final 2007 Stub-Period
      Revenue exceeds $2,989,858, the Contingent Merger Consideration payable pursuant
      to this section 3.6(d) shall be the sum of (A) an amount determined by dividing
      (1) $600,000, by (2) the number of Outstanding Shares, plus (B) the Additional
      Revenue Contingent Consideration (as defined in clause (d)(ii) below), plus
      (C)
      the Additional EBIT Contingent Consideration (as defined in clause (d)(iii)
      below).




(ii)  For
      purposes of this agreement, the term “Additional Revenue Contingent
      Consideration” means an amount determined by dividing (A) the Revenue-Based
      Contingent Amount (as defined below), by (B) the number of Outstanding Shares.
      As used in this agreement, the term “Revenue-Based Contingent Amount” means $400
      multiplied by a fraction, the numerator of which equals the Final 2007
      Stub-Period Revenue, reduced by $2,989,858, and the denominator of which equals
      $3,737; provided, however, the revenue-Based Contingent Amount shall not exceed
      $80,000.




(iii)  For
      purposes of this agreement, the term “Additional EBIT Contingent Consideration”
means an amount determined by dividing (A) the EBIT-Based Contingent Amount
      (as
      defined below), by (B) the number of Outstanding Shares. As used in this
      agreement, the term “EBIT-Based Contingent Amount” means $400 multiplied by a
      fraction, the numerator of which equals the Final 2007 Stub-Period EBIT, reduced
      by $791,368, and the denominator of which equals $1,131; provided, however,
      the
      EBIT-Based Contingent Amount shall not exceed $120,000.




(e)  Not
      later
      than five (5) business days after the Final 2007 Stub-Period EBIT Statement
      becomes final, binding, and conclusive on the parties, the Contingent Merger
      Consideration payable pursuant to section3.6(d) shall be paid in cash without
      interest to each former holder of Outstanding Shares who shall have surrendered
      Certificates formerly evidencing Outstanding Shares. Thereafter, as and when
      Certificates formerly evidencing Outstanding Shares are surrendered, the
      Contingent Merger Consideration payable pursuant to section 3.6(d) shall be
      paid
      promptly in cash without interest to the respective former holder of Outstanding
      Shares so surrendering a Certificate in respect of the Outstanding Shares
      evidenced by the Certificate. Notwithstanding the foregoing, however, (i) in
      the
      event that Anne Ferguson fails to perform, or delays in performing, the
      Financial Reporting Provisions (as set forth in her Employment Agreement) and
      the determination of the amount, if any, of Contingent Consideration payable
      pursuant to section 3.6(d) and the preparation of statements pursuant to section
      3.7 below are delayed, the obligation to pay any such Contingent Merger
      Consideration shall be delayed, until such Financial Reporting Provisions are
      fully performed, (ii) to the extent there are any unresolved Claims by the
      Parent Indemnified Parties under Article VIII on the date an amount is payable
      under this section 3.6(e), the amount so payable shall be reduced so that the
      sum of the balance after such payment plus the balance then in the Escrow Fund
      is not less than the aggregate Estimated Claim Amount in respect of such Claims
      under Article VIII (including reasonably anticipated attorneys’ fees and
      expenses), and (iii) as and when such Claims are resolved, additional amounts
      may be paid, as long as the sum of the balance after such payment plus the
      balance then in the Escrow Fund is not less than the aggregate amount of any
      such then unresolved Claims under Article VIII.


8


Section
      3.7  2010
      Contingent Merger Consideration .




(a)  Not
      later
      than April 30, 2009, the Parent shall prepare and deliver to the Representative
      a consolidated income statement for the Company and its consolidated
      subsidiaries for the year ending December 31, 2008 (the “2008 Income
      Statement”). Not later than April 30, 2010, the Parent shall prepare and deliver
      to the Representative (i) consolidated income statements for the Company and
      its
      consolidated subsidiaries for the year ending December 31, 2009 (the “2009
      Income Statement and, with the 2008 Income Statement, the “2008-2009 Income
      Statements”), and (ii) a report of the Parent’s chief financial officer setting
      forth the Net Annual Average Profit, and, in reasonable detail, the calculation
      of the Net Annual Average Profit (the “Preliminary Net Annual Average Profit
      Statement”). The 2008-2009 Income Statements shall be audited by the Parent’s
      independent accountants, shall present fairly the consolidated results of
      operations of the Company and its subsidiaries for each such year, and shall
      be
      in conformity with United States generally accepted accounting principles
      consistently applied (“GAAP”).




(b)  As
      used
      in this agreement:




(i)
      the
      term “Net Average Annual Profit” means 50% of the Cumulative Net Profit, if any,
      in the two years ending December 31, 2009,




(ii)
      “Cumulative Net Profit” in the two years ending December 31, 2009 means (A) the
      sum of the Net Profit for the year or years in which there was Net Profit,
      reduced by (B) the sum of the Net Loss for the year or years in which there
      was
      Net Loss, (C) the terms “Net Profit” and “Net Loss” for a particular period mean
      (1) the Company’s consolidated net profit or net loss, respectively, for that
      period, determined by the Parent on the basis of the Company’s consolidated
      income statement for the Company and its consolidated subsidiaries for the
      period, which shall be audited by the Parent’s independent accountants, shall
      present fairly the consolidated results of operations of the Company and its
      subsidiaries for the period, and shall be in conformity with GAAP consistently
      applied, and (2) subject to the adjustments set forth in schedule
      3.7(b) **.**


9


(c)  The
      Representative shall have 60 days after receipt of the 2008-2009 Income
      Statements and Preliminary Net Annual Average Profit Statement (the “Objection
      Period”) to object to any item or items shown on the Preliminary Net Annual
      Average Profit Statement. During the Objection Period, the Representative shall
      have access to all work papers used in the preparation of the Preliminary Net
      Annual Average Profit Statement. The Representative may, during the Objection
      Period, notify the Parent in writing of any good faith objections to the
      Preliminary Net Annual Average Profit Statement, setting forth a detailed
      description of such objections and the dollar amount of each objection. If
      the
      Representative does not so object during the Objection Period, the Preliminary
      Net Annual Average Profit Statement shall be final, binding, and conclusive
      on
      the parties. If the Representative so objects during the Objection Period,
      the
      Representative and the Parent shall attempt to resolve any such objections
      within 30 days following the Parent’s receipt of the Representative’s
      objections. If the Parent and the Representative are able to resolve all such
      objections, such resolution shall be final, binding, and conclusive on the
      parties. If the Parent and the Representative are unable to resolve all such
      objections within that 30-day period, the Parent and the Representative shall
      select and retain the Arbitrator within five days following the end of that
      30-day period (or, if they cannot agree on the Arbitrator, either may request
      that JAMS select an accounting firm as the Arbitrator) to resolve the
      disagreement. The Arbitrator shall be directed to resolve any items in dispute
      between the parties. The Arbitrator also shall determine how much of his fees
      and expenses shall be paid by each party. The Representative and the Parent
      shall (and shall cause the Surviving Corporation to) provide the Arbitrator
      full
      cooperation, and the Arbitrator shall perform such procedures and examine such
      books and records of the Company as it deems relevant. The Arbitrator shall
      be
      instructed to reach a conclusion regarding the disputed items within 30 days
      following the submission to him of any disagreements and, in any case, as soon
      as practicable after such submission. The Arbitrator’s resolution of the
      disputed items shall be final, binding, and conclusive on the parties. As used
      in this agreement, (i) the term “Final Net Annual Average Profit Statement”
means the Preliminary Net Annual Average Profit Statement, after the acceptance
      of it by the Representative or after its adjustment to reflect the resolution
      of
      all objections pursuant to this section 3.7(c), as the case may be, and (ii)
      the
      term “Final Net Annual Average Profit” means the Net Annual Average Profit
      reflected in the Final Net Annual Average Profit Statement.




(d)  (i)  If
      the
      Final Net Annual Average Profit exceeds $1,500,000 but is equal to or less
      than
      $2,000,000, the Contingent Merger Consideration payable pursuant to this section
      3.7(d) shall be an amount determined by dividing (A) an amount determined by
      multiplying (1) the Net Annual Average Profit reduced by $1,500,000, by (2)
      6.5,
      by (B) the number of Outstanding Shares.




(ii)  If
      the
      Final Net Annual Average Profit exceeds $2,000,000 but is equal to or less
      than
      $2,500,000, the Contingent Merger Consideration payable pursuant to this section
      3.7(d) shall be an amount determined by dividing (A) an amount equal to the
      sum
      of (1) an amount determined by multiplying (aa) the Net Annual Average Profit
      reduced by $2,000,000, by (bb) 7.5, plus (2) $3,250,000, by (B) the number
      of
      Outstanding Shares.


10


(iii)  If
      the
      Final Net Annual Average Profit exceeds $2,500,000, the Contingent Merger
      Consideration payable pursuant to this section 3.7(d) shall be an amount
      determined by dividing (A) an amount equal to the sum of (1) an amount
      determined by multiplying (aa) the Net Annual Average Profit reduced by
      $2,500,000, by (bb) 8, plus (2) $7,000,000, by (B) the number of Outstanding
      Shares.




(e)  Not
      later
      than five (5) business days after the Final Net Annual Average Profit Statement
      becomes final, binding, and conclusive on the parties, the Contingent Merger
      Consideration payable pursuant to section 3.7(d) shall be paid in cash without
      interest to each former holder of Outstanding Shares who shall have surrendered
      Certificates formerly evidencing Outstanding Shares. Thereafter, as and when
      Certificates formerly evidencing Outstanding Shares are surrendered, the
      Contingent Merger Consideration payable pursuant to section 3.7(d) shall be
      paid
      promptly in cash without interest to the respective former holder of Outstanding
      Shares so surrendering a Certificate in respect of the Outstanding Shares
      evidenced by the Certificate. Notwithstanding the foregoing, however, (i) in
      the
      event that Anne Ferguson fails to perform, or delays in performing, the
      Financial Reporting Provisions (as set forth in her Employment Agreement) and
      the determination of the amount, if any, of Contingent Consideration payable
      pursuant to this section 3.7 and preparation of statements pursuant to this
      section 3.7 are delayed, the obligation to pay any such Contingent Merger
      Consideration shall be delayed, until such Financial Reporting Provisions are
      fully performed, (ii) to the extent there are any unresolved Claims by the
      Parent Indemnified Parties under Article VIII on the date an amount is payable
      under this section 3.7(e), the amount so payable shall be reduced so that the
      sum of the balance after such payment plus the balance then in the Escrow Fund
      is not less than the aggregate Estimated Claim Amount in respect of such Claims
      under Article VIII (including reasonably anticipated attorneys’ fees and
      expenses), and (iii) as and when such Claims are resolved, additional amounts
      may be paid, as long as the sum of the balance after such payment plus the
      balance then in the Escrow Fund is not less than the aggregate amount of any
      such then unresolved Claims under Article VIII.




Section
      3.8  Transfer
      of Rights to Contingent Consideration .
      Notwithstanding anything to the contrary in this agreement, the parties hereto
      recognize and acknowledge that each Principal Shareholder is entitled to
      transfer his, her, or its rights to the Contingent Merger Consideration to
      any
      other Principal Shareholder (or, if the transfer is, in substance, gratuitous,
      to any third party) at any time before April 30, 2010. Upon any such transfer,
      the holder transferring the rights to the Contingent Merger Consideration agrees
      immediately to deliver documentation reasonably satisfactory to the Parent
      evidencing such transfer.




Section
      3.9 Release
      by Principal Shareholders .    
      Each Principal Shareholder hereby agrees that (a) at the Effective Time, the
      Company and each Subsidiary (as defined in section 5.4) shall be released from
      all liabilities and obligations, contingent or actual, arising from any fact,
      event, or circumstance occurring or existing at any time on or before the
      Effective Time (including, without limitation, all liabilities and obligations
      arising by contract,  tort, statute, or otherwise, but excluding any
      liability or obligation under this agreement, the Escrow Agreement, or the
      Employment Agreements, and any liability set forth on schedule 3.9) (“Pre-Merger
      Company Liabilities”).


11


**ARTICLE
      IV**





**REPRESENTATIONS
      AND WARRANTIES OF PARENT AND SUB**





The
      Parent represents and warrants to the Company and the Shareholders as
      follows:





Section
      4.1  Existence
      and Corporate Power of the Parent and Sub .
      The
      Parent is a corporation validly existing and in good standing under the law
      of
      the nation of Israel, and has the corporate power to execute, deliver, and
      perform its obligations under this agreement and the Escrow Agreement. The
      Sub
      is a corporation validly existing and in good standing under the law of the
      state of Texas, and has the corporate power to execute, deliver, and perform
      its
      obligations under this agreement and the Escrow Agreement.




Section
      4.2  Authority .
      The
      execution, delivery, and performance of its obligations under this agreement
      and
      the Escrow Agreement by each of the Parent and the Sub have been duly authorized
      by its board of directors, and by the Parent as the sole shareholder of the
      Sub,
      and no other corporate proceedings on the part of the Parent or the Sub are
      necessary to authorize the execution, delivery, or performance of this agreement
      or the Escrow Agreement. This agreement has been duly and validly executed
      and
      delivered by each of the Parent and the Sub and constitutes a valid and binding
      agreement of each of the Parent and the Sub, enforceable against each in
      accordance with its terms, except insofar as enforceability may be limited
      by
      applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
      affecting creditors’ rights generally, or principles governing the availability
      of equitable remedies.




Section
      4.3  Consents
      and Approvals; No Violations .
      Except
      for the filing and recordation of the Articles of Merger under the TBCL, no
      filing with, and no permit, authorization, consent, or approval of, any public
      body or authority is necessary for the consummation by the Parent and the Sub
      of
      the transactions contemplated by this agreement. Neither the execution and
      delivery of this agreement or the Escrow Agreement by the Parent or the Sub
      nor
      the performance by the Parent or the Sub of its obligations under this agreement
      or the Escrow Agreement will (a) conflict with or result in any breach of any
      provisions of its organizational instruments, (b) result in a violation or
      breach of, or constitute (with or without due notice or lapse of time or both)
      a
      default under, any agreement or other instrument to which it is a party or
      by
      which it or any of its assets may be bound, or (c) violate any order, writ,
      injunction, decree, statute, rule, or regulation applicable to it or its
      assets.


12


Section
      4.4  Brokers .  No
      broker, finder, or financial advisor is entitled to any brokerage, finder’s, or
      other fee or commission in connection with the Merger or the transactions
      contemplated by this agreement based upon arrangements made by or on behalf
      of
      the Parent or the Sub.




Section
      4.5  Proceedings .
      There
      is no claim, suit, proceeding or investigation pending, or to the knowledge
      of
      any officer, director, or key employee of the Parent threatened against or
      affecting the Parent or the Sub, which, if determined adversely to either the
      Parent or the Sub, could affect such party’s ability to consummate the
      transactions contemplated hereby.




Section
      4.6  Diligence .
      The
      Parent, the Sub, and their respective agents have been permitted access to
      the
      records, facilities, equipment, returns, contracts, and other properties and
      assets of the Company they and their respective agents have, by a general
      questionnaire, requested to see or review, and they and their respective agents
      have had an opportunity to meet with the Company and its agents to discuss
      the
      businesses and assets of the Company. It is understood and agreed by the parties
      to this agreement that nothing in this section 4.6 is intended to, or shall,
      diminish or otherwise affect the rights of any Parent Indemnified Parties under
      Article VIII.




Section
      4.7  Sufficient
      Funds .  Parent
      has, on the date hereof, the financial capability to consummate the Merger
      and
      the transactions contemplated hereby on the terms and subject to the conditions
      set forth in this Agreement.





**ARTICLE
      V**





**REPRESENTATIONS
      AND WARRANTIES OF THE PRINCIPAL SHAREHOLDERS**




The
      Principal Shareholders jointly and severally represent and warrant to the Parent
      and the Sub as follows:





Section
      5.1  Existence,
      Qualification, Etc. Each of
      the Company and ASNA Ltd. (the “UK Subsidiary”) is a company validly existing
      and in good standing under the law of the state of Texas and the Commonwealth
      of
      England and Wales, respectively, and has full corporate power and authority
      to
      conduct its business and own and operate its properties as now conducted, owned,
      and operated. The Company has delivered to the Parent true, correct, and
      complete copies of the Company’s certificate of incorporation and by-laws and
      the UK Subsidiary’s organizational instruments. Neither the Company nor the UK
      Subsidiary is required to be licensed or qualified as a foreign corporation
      in
      any jurisdiction.




Section
      5.2  Authorization
      and Enforceability; Shares .  Each
      Principal Shareholder is legally competent to execute, deliver, and perform
      that
      Shareholder’s obligations under this agreement, and none of those actions will
      violate any applicable law, regulation, order, or judgment, or result in the
      breach of, or constitute a default (or an event that, with notice or lapse
      of
      time or both, would constitute a default) under, any agreement, instrument,
      or
      understanding to which that Shareholder is a party or by which that Shareholder
      is bound. **** The
      Company has the full power and authority and has taken all required action
      necessary to permit it to execute, deliver, and perform this agreement, the
      Escrow Agreement, and the employment agreements attached as exhibit 5.2 (the
      “Employment Agreements”), and none of those actions will violate any provision
      of the Company’s certificate of incorporation or bylaws or any applicable law,
      regulation, order, or judgment, or result in the breach of, or constitute a
      default (or an event that, with notice or lapse of time or both, would
      constitute a default) under, any agreement, instrument, or understanding to
      which it is a party or by which it is bound. This agreement constitutes a legal,
      valid, and binding obligation of each Principal Shareholder, enforceable against
      each in accordance with its terms, except to the extent limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, and similar laws of general
      application related to the enforcement of creditor’s rights generally and
      general principles of equity. Each Employment Agreement constitutes a legal,
      valid, and binding obligation of the Company, enforceable against the Company
      in
      accordance with its terms, except to the extent limited by applicable
      bankruptcy, insolvency, reorganization, moratorium, and similar laws of general
      application related to the enforcement of creditor’s rights generally and
      general principles of equity.


13


Section **** 5.3  Capitalization .  The
      authorized and issued capital stock of the Company are as set forth in schedule
      5.3, which sets forth the number of Shares owned of record by each Shareholder.
      All the Shares are validly issued, fully paid, and nonassessable, and have
      been
      issued in compliance with all applicable laws. There are no outstanding options,
      warrants, rights to subscribe for, calls or commitments of any character
      whatsoever relating to, or any other securities, rights, or obligations
      convertible into or exchangeable for, or otherwise giving any person or entity
      any right to subscribe for or acquire, any shares, stock, or other securities
      of
      the Company or the UK Subsidiary, or, to the actual knowledge (“Knowledge”) of
      the Senior Specified Employees (as defined in section 5.7), CoCovai 400 S.L.,
      a
      Spanish Sociedad Limitada (the “Spanish Subsidiary”) (collectively, “Equity
      Commitments”) .




Section
      5.4  Subsidiaries .  The
      Company does not own any shares or other interests of any kind in any other
      business or entity, except for a one hundred percent (100%) interest in the
      UK
      Subsidiary, which has a thirty percent (30%) interest in the Spanish Subsidiary. Except
      for the UK Subsidiary’s ownership interest in the Spanish Subsidiary, the UK
      Subsidiary does not own any shares or other equity interests of any kind in
      any
      other business or entity. Schedule 5.4 fairly describes the capital structure
      of
      the UK Subsidiary, including, without limitation, the authorized and outstanding
      capital stock and Equity Commitments, the equity and other securities of the
      UK
      Subsidiary owned by the Company, and all written and oral agreements,
      arrangements, and understandings between the UK Subsidiary and its officers,
      directors, and affiliates, on the one hand, and the Company and its officers,
      directors, and affiliates, on the other hand. Except as set forth in the
      shareholders agreement among the Spanish Subsidiary, Carlos Valero, and the
      UK
      Subsidiary dated June 2006, and the right of first refusal, co-sale and buy-sell
      agreement among the Spanish Subsidiary, Carlos Valero, and the UK Subsidiary
      dated June 2006, neither the Company nor the UK Subsidiary has any liability
      or
      obligation, actual or contingent, as a shareholder of the Spanish Subsidiary
      or
      otherwise, to or in respect of the Spanish Subsidiary (each of the UK Subsidiary
      and the Spanish Subsidiary, a “Subsidiary”).


14


Section
      5.5  Financial
      Statements and
      Information .




(a)  Attached
      hereto as schedule 5.5(a) are the Company’s unaudited consolidated and
      consolidating balance sheets and statements of income as of and for the fiscal
      year ended December 31, 2006 **** (the
      “2006 Financial Statements”) and the Company’s consolidated and consolidating
      balance sheets and statements of income as of and for the six months ended
      June
      30, 2007 (the “Most Recent Financial Statements”). Holthouse, Carlin & Van
      Tright, LLP have consulted with the Company in the Company’s preparation of the
      2006 Financial Statements and the Most Recent Financial Statements (the “Company
      Financial Statements”).




(b)  The
      Company Financial Statements have been prepared in good faith and in accordance
      with the books and records of the Company and the UK Subsidiary and fairly
      present the consolidated or consolidating, as the case may be, financial
      condition and consolidated or consolidating, as the case may be, results of
      operations of the Company and the UK Subsidiary as of the dates and for the
      periods indicated.




(c)
      Schedule 5.5 contains a true and complete copy of the Company’s and the UK
      Subsidiary’s budgets for the year ending December 31, 2007, as well as a
      detailed list of backlog as of August 1, 2007. As of the date of this agreement,
      to the Knowledge of the Senior Specified Employees, the budgets reasonably
      reflect all material information currently available to the Company and the
      UK
      Subsidiary.




(d)
      The
      aggregate amount of the Company’s and the UK Subsidiary’s cash and cash
      equivalents on the date of this agreement (and prior to the distribution of
      the
      dividend referred to in section 5.6(a)(xi) is not less than $$1,800,000.
      Schedule 5.5 sets forth the amount, if any, of the Company’s and the UK
      Subsidiary’s aggregate revenues derived from sales to affiliates in the 12
      months ended June 30, 2007.




Section
      5.6  Absence
      of Certain Changes




(a)  Except
      as
      set forth in schedule 5.6, from the date of the Most Recent Financial Statement
      (the “Financial Statement Date”) to the date of this agreement, neither the
      Company nor the UK Subsidiary has:




(i)  incurred
      any liabilities, other than current liabilities incurred, or obligations under
      contracts entered into, in the ordinary course of business and consistent with
      past practice;




(ii)  paid,
      discharged, or satisfied any claim, lien, or liability, other than any claim,
      lien, or liability (A) reflected or reserved against on the consolidated balance
      sheet as of the Most Recent Financial Statements and paid, discharged, or
      satisfied in the ordinary course of business and consistent with past practice
      since the Financial Statement Date, (B) incurred and paid, discharged, or
      satisfied since the Financial Statement Date in the ordinary course of business
      and consistent with past practice;


15


(iii)  sold,
      leased, assigned, or otherwise transferred any of its assets, tangible or
      intangible, or sold any of its services (other than sales of assets or services
      in the ordinary course of business and consistent with past
      practice);




(iv)  permitted
      any of its assets, tangible or intangible, to become subject to any lien,
      security interest, or other charge or encumbrance (a “Lien”) (other than any
      Permitted Lien, which, for purposes of this agreement shall mean a Lien for
      Taxes (as defined in section 5.19(c)(ii)) not yet due and payable, a
      materialman’s Lien in respect of a claim not yet due and payable, and any
      similar inchoate statutory Lien that could not adversely affect the value of
      any
      of the Company’s or the UK Subsidiary’s assets or the ability of the Company or
      the UK Subsidiary to use, sell, or otherwise exploit such assets);




(v)  written
      off as uncollectible any accounts receivable;




(vi)  terminated
      or amended, or suffered the termination or amendment of, or failed to perform
      in
      all material respects, all its obligations, or suffered or permitted any
      material default to exist under, any material agreement, license, or
      permit;




(vii)  suffered
      any damage, destruction, or loss of any fixed assets (whether or not covered
      by
      insurance);




(viii)  made
      any
      loan (including, without limitation, any intercompany loan) to any person or
      entity (including advances to employees and intercompany advances);




(ix)  canceled,
      waived, or released any debt, claim, or right;




(x)  paid
      any
      amount to, or entered into any agreement, arrangement, or transaction with,
      any
      affiliate (including its officers, directors, and employees), other than
      payments of salary, reimbursement of expenses and benefits to employees in
      the
      ordinary course of business and consistent with past practice;




(xi)  declared,
      set aside, or paid any dividend or distribution with respect to its capital
      stock, or redeemed, purchased, or otherwise acquired any of its capital stock,
      except for a cash dividend payable to holders of Outstanding Shares immediately
      before the Effective Time in an aggregate amount equal to
      $1,700,000;




(xii)  granted
      any increase in the compensation of any officer or employee or made any other
      change in employment terms of any officer or employee;




(xiii)  made
      any
      change in accounting or cash management practices;




(xiv)  suffered
      or caused any other occurrence, event, or transaction outside the ordinary
      course of business; or


16


(xv)  agreed,
      in writing or otherwise, to any of the foregoing.




(b)  Since
      the
      Financial Statement Date, there has been no material adverse change in the
      Company or the UK Subsidiary, or its respective business.




Section
      5.7  Litigation .  Except
      as
      set forth in schedule 5.7, no claim, suit, proceeding, or investigation is
      pending or, to the actual Knowledge of Anne Ferguson and Eduardo Ross (the
      “Specified Senior Employees”), threatened against or affecting the Company or
      the UK Subsidiary, there is no valid basis for any claim, suit, or proceeding
      against the Company or the UK Subsidiary, and, to the actual Knowledge of the
      Specified Employees, no claim, suit, proceeding, or investigation is pending
      or
      threatened against or affecting the Spanish Subsidiary and there is no valid
      basis for any claim, suit, or proceeding against the Spanish
      Subsidiary.




Section
      5.8   Licenses,
      Compliance with Law, Other Agreements .
      Each of
      the Company and the UK Subsidiary, and, to the actual Knowledge of the Specified
      Employees, the Spanish Subsidiary, has all material franchises, permits,
      licenses, and other rights to allow it to conduct its business and is not in
      violation, in any material respect, of any order or decree of any court, or
      of
      any law, order, or regulation of any Governmental Authority (as defined below),
      or of the provision of any material contract or agreement to which it is a
      party
      or by which it is bound, and neither this agreement nor the transactions
      contemplated by this agreement will result in any such violation. The business
      of each of the Company and the UK Subsidiary, and, to the actual Knowledge
      of
      the Specified Employees, the Spanish Subsidiary, has been conducted in all
      material respects in compliance with all applicable laws, rules, and
      regulations. As used in this agreement, the term "Governmental Authority" means
      any domestic or foreign national, state, provincial, municipal or other local
      judicial, legislative, executive, administrative, or regulatory authority or
      any
      governmental or private body exercising any regulatory or taxing
      authority.




Section
      5.9  Third-Party
      Approvals .  Neither
      the Company nor the UK Subsidiary, nor, to the actual Knowledge of the Specified
      Employees, the Spanish Subsidiary, is required to obtain any order, consent,
      approval, or authorization of, or to make any declaration or filing with, any
      Governmental Agency or other third party in connection with the execution,
      delivery, or performance of this agreement or the transactions contemplated
      by
      this agreement.




Section
      5.10  No
      Undisclosed Liabilities .  None
      of
      the Company or the Subsidiaries has any liabilities or obligations, whether
      or
      not disclosed in the Financial Statements or the notes to the Financial
      Statements, and whether actual or contingent, except (a) as disclosed in
      schedule 5.10 or on the face of the Financial Statements (excluding any notes
      to
      the Financial Statements), (b) those expressly set forth as such in a schedule
      to this agreement, (c) those incurred in the ordinary course of business and
      consistent with past practice since the Financial Statement Date, or (d) those
      under agreements, written or oral, set forth in a schedule to this agreement
      or
      not required to be set forth in a schedule to this agreement.




17


Section
      5.11  Tangible
      Assets .  Each
      of
      the Company and the UK Subsidiary owns or leases all tangible assets used or
      reasonably necessary in connection with the conduct of its business. All
      material tangible assets owned or leased by the Company are free from any Liens
      (other than Permitted Liens), are free from any material defects, have been
      maintained in accordance with normal industry practice and any regulatory
      standard or procedure to which such assets are subject, are in good operating
      condition and repair (subject to normal wear and tear), and are suitable for
      the
      purposes for which such assets are used, other than Liens, defects, and wear
      and
      tear that, in the aggregate, could not be expected to have
      a
      material adverse effect on the Company or the UK Subsidiary, as the case may
      be.




Section
      5.12  Real
      Property .  Neither
      the Company nor the UK Subsidiary owns any real property.




Section
      5.13  Intellectual
      Property  ****




(a)  Schedule
      5.13 sets forth, for the Intellectual Property (as defined below), a complete
      and accurate list of all U.S. and foreign (i) Patents (as defined below); (ii)
      Trademarks (as defined below); (iii) Copyright (as defined below); and (iv)
      all
      Software (as defined below) (other than readily available "off-the-shelf"
      commercial software programs having an acquisition price of less than $10,000),
      in the case of subclauses (i) through (iv) above, that are owned, licensed,
      or
      leased, by the Company or the UK Subsidiary, identifying which Intellectual
      Property is owned, licensed, or leased, as the case may be, as well as the
      identity of the lessor or licensor with respect thereto. The Intellectual
      Property constitutes all the material intellectual property used in, and
      necessary to operate, the business of each of the Company and the UK Subsidiary
      in the manner in which it is currently operated. To the extent indicated on
      schedule 5.13, the Intellectual Property has been duly registered in, filed
      in
      or issued by the United States Patent and Trademark Office, United States
      Copyright Office, a duly authorized and appropriate domain name registrar,
      the
      appropriate offices in the various states of the United States and the
      appropriate offices of other jurisdictions (foreign and domestic), and each
      such
      registration, filing and issuance remains in full force and effect.




(b)  Schedule
      5.13(b) sets forth a complete and accurate list of all material oral or written
      agreements to which the Company or the UK Subsidiary is a party or otherwise
      bound, (i) granting or obtaining any right to use or practice any rights
      under any Intellectual Property (other than any license for readily available
      “off-the-shelf” commercial software programs purchased by the Company or the UK
      Subsidiary for less than $10,000, which are not bundled in the Intellectual
      Property), or (ii) restricting the Company's right to use any Intellectual
      Property, including, without limitation, any license agreements, development
      agreements, distribution agreements, settlement agreements, consent to use
      agreements, and covenants not to sue (collectively, the “License Agreements”).
      The License Agreements of the Company are valid and binding obligations of
      the
      Company, enforceable in accordance with their terms, and, to the Specified
      Senior Employees’ Knowledge, there exists no event or condition that will result
      in a violation or breach of, or constitute (with or without due notice of lapse
      of time or both) a default by any party under any such License Agreement. Except
      as set forth in schedule 5.13, the Company has not licensed or sublicensed
      its
      rights in any material Intellectual Property, other than pursuant to a valid
      and
      binding License Agreement. No royalties, honoraria, or other fees are currently
      payable by the Company to any third parties for the use of or right to use
      any
      Intellectual Property, except pursuant to any License Agreement and set forth
      on
      schedule 5.13(b).


18


(c)  Except
      as
      set forth on schedule 5.13(c), the Company owns the Intellectual Property
      identified as “owned” in schedule 5.13(a) free and clear of all Liens, other
      than Permitted Liens, and has a valid right to use, free and clear of all Liens,
      other than Permitted Liens, all the Intellectual Property of the Company. The
      Company is listed in the records of the appropriate United States, state, or
      foreign registry as the sole current owner of record for each application and
      registration and has the exclusive right to file, prosecute, and maintain all
      applications and registrations with respect to the Intellectual Property that
      is
      listed on schedule 5.13.




(d)  Except
      as
      set forth on schedule 5.13, none of the Intellectual Property owned by the
      Company and, to the Knowledge of the Specified Senior Employees, none of the
      material Intellectual Property licensed to the Company has been cancelled,
      expired, been abandoned, or otherwise terminated, and all renewal fees in
      respect thereof have been duly paid.




(e)  Except
      as
      set forth on schedule 5.13(e), the Company has not received any written notice
      or claim and there is no pending or, to the Knowledge of the Specified Senior
      Employees, threatened claim, suit, arbitration, interference or other
      adversarial or contested proceeding before any court, agency, arbitral tribunal,
      or registration authority in any jurisdiction (foreign or domestic) involving
      the Intellectual Property owned by the Company or the material Intellectual
      Property licensed to the Company alleging that the activities or the conduct
      of
      the business of the Company infringes upon, dilutes, violates, or constitutes
      the unauthorized use, misuse, or misappropriation of the intellectual property
      rights of any third party or challenging the Company's ownership, use, validity,
      enforceability, or registrability of any of its Intellectual Property. There
      are
      no settlements, forebearances to sue, consents, judgments, or orders or similar
      obligations to which the Company is a party, other than the License Agreements,
      that (i) restrict the Company's right to use any Intellectual Property, (ii)
      restrict the Company's business in order to accommodate a third party's
      Intellectual Property rights, or (iii) permit third parties to use any
      Intellectual Property owned by the Company.




(f)  Except
      as
      set forth on schedule 5.13(f), the conduct of the Company's business as
      currently conducted does not infringe upon (either directly or indirectly such
      as through contributory infringement or inducement to infringe) any Intellectual
      Property owned or controlled by any third party. Except as set forth on schedule
      5.13, to the Specified Senior Employees’ Knowledge, no third party is
      misappropriating, infringing, diluting, or violating any Intellectual Property
      owned by the Company and no such claims, suits, arbitrations, or other
      adversarial proceedings have been brought or threatened against any third party
      by the Company.


19


(g)  The
      Company takes reasonable measures to protect the confidentiality of its Trade
      Secrets (as defined below). No Trade Secret of the Company has been disclosed
      or
      authorized to be disclosed to any third party, other than pursuant to a
      non-disclosure agreement. To the Knowledge of the Specified Senior Employees,
      except as set forth on schedule 5.13(g), no party to any non-disclosure
      agreement relating to its Trade Secrets is in breach or default thereof. The
      Parent has been provided with a true and complete copy of the Company's form
      of
      non-disclosure agreement and the non-disclosure agreements referred to in this
      clause (g) contain substantially the same terms and conditions as the form
      of
      non-disclosure agreement.




(h)  Except
      as
      set forth on schedule 5.13(h), no current or former director, officer, or
      employee of the Company (or any of its predecessors in interest) will, after
      giving effect to the transactions contemplated by this agreement, directly
      own
      any of the Intellectual Property owned or used by the Company.




(i)  The
      Software set forth in schedule 5.13(c) as “owned” was either developed (i) by
      employees of the Company within the scope of their employment, or (ii) by
      independent contractors who have assigned their rights to the Company pursuant
      to signed, written agreements.




(j)  To
      the
      Knowledge of the Specified Senior Employees, the Trademarks listed on schedule
      5.13 have been continuously used in the form appearing in, and in connection
      with the goods and services listed in, their respective registration
      certificates. To the Knowledge of the Specified Senior Employees, there has
      been
      no prior use of the Trademarks by any third party that would confer upon the
      third party superior rights in such Trademarks. The Company has undertaken
      reasonable policing of such Trademarks against third party
      infringement.




(k)  As
      used
      in this agreement:




(i)  "Intellectual
      Property" means any and all Copyrights, Patents, Software, Trademarks, Trade
      Secret, moral and economic rights of authors and inventors (however
      denominated), databases and compilations, "mask works" (as defined under 17
      U.S.C. Section 901) and any registrations and applications for "mask works,"
      and
      all improvements and refinements of any of the foregoing.




(ii)  "Copyrights"
      means all copyrights (including any registrations and applications for any
      of
      the foregoing) and copyrightable works.




(iii)  "Patents"
      means all patents and industrial designs (including any continuations,
      divisionals, continuations-in-part, renewals, provisionals, reissues, and
      applications for any of the foregoing), inventions (whether or not patentable),
      and invention disclosures.




(iv)  "Software"
      means all (A) computer programs, including any and all software implementation
      of algorithms, models and methodologies, whether in source code or object code
      form, (B) databases and compilations, including any and all data and collections
      of data, (C) designs, processes, procedures and data collectors, and (D) all
      documentation, including user manuals and training materials, relating to any
      of
      the foregoing.


20


(v)  "Trademarks"
      means all domestic and foreign registered or material unregistered trademarks,
      service marks, trade names, corporate and business names, brand names, Internet
      domain names, universal resource locators, designs, logos, trade dress, slogans,
      and general intangibles of like nature, together with all goodwill,
      registrations and applications related to the foregoing.




(vi)  "Trade
      Secrets" means technical data and customer lists, technology, trade secrets,
      and
      any other confidential information (including any lists of professional
      employees), know-how, proprietary processes, formulae, algorithms, models,
      and
      methodologies (whether or not patentable).




Section
      5.14  Clients .  There
      has
      not been any material adverse change in the business relationship of the Company
      or the UK Subsidiary with any client who accounted for more than 5% of the
      Company's consolidated revenues during the 12 months ended June 30,
      2007.




Section
      5.15  Insurance .  Schedule
      5.15 contains an accurate and complete summary of all policies of fire,
      liability, workmen's compensation, and other forms of insurance owned or held
      by
      the Company or the UK Subsidiary. All such policies are in full force and
      effect, all premiums with respect thereto covering all periods up to and
      including the date of the Closing have been paid or accrued on the books and
      records of the Company and the UK Subsidiary, and no notice of cancellation
      or
      termination has been received with respect to any such policy. Such policies
      are
      sufficient for compliance with all requirements of law and of all agreements
      to
      which the Company or the UK Subsidiary is a party; are valid, outstanding and
      enforceable policies; provide adequate insurance coverage for the assets and
      operations of the Company and the UK Subsidiary; will remain in full force
      and
      effect through the respective dates set forth in schedule 5.15 without the
      payment of additional premiums; and will not in any way be affected by, or
      terminate or lapse by reason of, the transactions contemplated by this
      agreement. Neither the Company nor the UK Subsidiary has been refused any
      insurance with respect to its assets or operations, nor has its coverage been
      limited, by any insurance carrier to which it has applied for any such insurance
      or with which it has carried insurance during the last five years.




Section
      5.16  Employees ,
      Etc .  Schedule
      5.16 lists each employee (which term, as used in this agreement, includes
      consultants, unless the context otherwise requires) of the Company and the
      UK
      Subsidiary and the respective employee’s gross salary. Except as set forth in
      schedule 5.16, no employee of the Company received any rights or benefits
      greater than as provided in the Company’s “Employee Hand Book” (updated January
      2007), a true and complete copy of which has been provided to the Parent. From
      the Financial Statement Date to the date of this agreement, no employee has
      terminated, or, to the Knowledge of the Specified Senior Employees, plans to
      terminate, employment with the Company or the UK Subsidiary. Neither the Company
      nor the UK Subsidiary has committed any unfair labor practice or violated any
      applicable law or regulation regulating employers or the terms and conditions
      of
      its employees' employment. All
      employees of the Company and the UK Subsidiary are employed ”at will”, and their
      employment can be terminated by the Company or the UK Subsidiary, as the case
      may be, at the will of the respective entity, without obligation to pay
      severance and without prior notice of more than 60 days.


21


Section
      5.17  Employee
      Benefits .  Except
      as
      set forth in schedule 5.17, neither the Company nor the UK Subsidiary maintains
      or has ever maintained any employee pension benefit plans (as defined in section
      3(2) of the Employee Retirement Income Security Act (“ERISA”), stakeholder
      pension scheme (as defined in section 1(1) of the Pension Schemes Act 1993),
      employee welfare benefit plans (as defined in section 3(1) of ERISA), or fringe
      benefit plans or programs (collectively, “Plans”). Except as set forth in
      schedule 5.17, the Financial Statements reflect all accruals for liabilities
      for
      all Plans, including, without limitation, vacation benefits, sick day benefits,
      bonuses, and deferred compensation. Schedule 5.17 describes all benefit changes
      within the past 12 months. Except as set forth in schedule 5.17, there are
      no
      amounts required to be paid but not yet paid by the Company or the UK Subsidiary
      or their respective employees under any Plan, whether or not such amounts are,
      or are required to be, reflected as liabilities in the Financial Statements.
      Except as set forth in schedule 5.17, no further changes have been agreed or
      committed to or announced by or on behalf of the Company or the UK Subsidiary;
      and, except as set forth in schedule 5.17, no further changes are planned,
      scheduled, or contemplated by the Company or the UK Subsidiary prior to August
      15, 2008. Except
      as set forth in schedule 5.16 or 5.17 or as reflected as liabilities in the
      Financial Statements, neither the Company nor the UK Subsidiary has any
      liability or obligation, actual or contingent, to any past or current employee.





Section
      5.18  Related
      Party Agreements .  Schedule
      5.18 sets forth all agreements, arrangements, and understandings between the
      Company, the UK Subsidiary, or, to the actual Knowledge of the Specified
      Employees, the Spanish Subsidiary, on the one hand, and any of the Company’s or
      the Subsidiaries employees, officers, directors, or affiliates, on the other
      hand. Except as set forth in schedule 5.18, neither the Company nor the UK
      Subsidiary is a party to any agreements, arrangements, or understandings with
      any of its employees, officers, directors, or affiliates.




Section
      5.19  Taxes




(a)  Schedule
      5.19 sets forth the dates through which all Tax Returns (as defined below)
      of
      the Company and the UK Subsidiary has been audited.




(b)  Except
      as
      set forth in schedule 5.19:




(i)  each
      of
      the Company and the UK Subsidiary has filed all Tax Returns it was required
      to
      file, and has paid all Taxes (as defined below) shown, or required to be shown,
      on those Tax Returns as owing;




(ii)  neither
      the Company nor the UK Subsidiary (i) has ever been a member of an affiliated
      group filing a consolidated federal Tax Return and (ii) has any liability for
      the Taxes of any person or entity (other than itself (under Treasury Regulation
      §1.1502-6 or any similar provision of state, local, or foreign law), as a
      transferee or successor, by contract, or otherwise;


22


(iii)  each
      of
      the Company and the UK Subsidiary has withheld and paid all Taxes required
      to
      have been withheld and paid in connection with amounts paid or owing to any
      employee, independent contractor, creditor, shareholder, or other third party;
      and




(iv)  there
      is
      no dispute or claim concerning any Tax Liability of the Company or the UK
      Subsidiary either (A) claimed or raised by any authority in writing or (B)
      as to
      which the Company or any Specified Senior Employee has Knowledge.




(c)  As
      used
      in this agreement:





(ii)  "Tax
      Authority" means any competent Governmental Authority responsible for the
      determination, assessment or collection of Taxes.




(ii)  "Tax"
      or
      "Taxes" means any and all federal, state, local, foreign and other taxes,
      customs, duties or similar fees, assessments or charges of any kind, including
      but not limited to those on or measured by or referred to as income, gross
      receipts, capital, sales, use, ad valorem, franchise, profits, license,
      withholding, payroll, employment, excise, severance, stamp, social security,
      workers' compensation, unemployment compensation, net worth, transfer,
      occupation, premium, value added, real or personal property or windfall profits
      taxes, customs, duties or similar fees, assessments or charges, together with
      any interest and any penalties, additions to tax or additional amounts imposed
      by any Governmental Authority.




(iii)  "Tax
      Return" means any return, report, certificate, form or similar statement or
      document (including, without limitation, any related or supporting information
      or schedule attached thereto and any information return, amended tax return,
      claim for refund or declaration of estimated Tax) required or permitted to
      be
      supplied to, or filed with, a Tax Authority in connection the determination,
      assessment or collection of any Tax or the administration of any laws of any
      Governmental Authority relating to any Tax.




5.20  Certain
      Fees .  After
      the Effective Time and upon payment of the Fees and Expenses (as defined below),
      no fees or commissions will be payable by the Company or the UK Subsidiary
      to
      any broker, financial advisor, finder, investment banker, or bank with respect
      to the transactions contemplated by this agreement. Schedule 5.20 sets forth
      all
      costs and expenses incurred or expected to be incurred by the Company or the
      UK
      Subsidiary, or, to the actual Knowledge of the Specified Employees, the Spanish
      Subsidiary, through the Effective Time in connection with this agreement or
      the
      transactions contemplated by this agreement, including, without limitation,
      fees
      and disbursements of counsel, accountants, and those referred to in the
      preceding sentence (including all fees and expenses payable now at any time
      before, at, or after the Effective Time, to Verto Group LLC) (the “Fees and
      Expenses”).


23


5.21  Contracts
      and Commitments




(a)  Except
      as
      set forth in schedule 5.21, neither the Company nor the UK Subsidiary is a
      party
      to or bound by any of the following agreements, whether such agreements are
      written or oral:




(i)  contract
      for the employment of any person on a full-time, part-time, or consulting basis
      or any severance agreements, other than at the will of the employer and subject
      to termination by either party, without cause and notice of
      termination;




(ii)  except
      for any capital lease under which the Company and the UK Subsidiary have
      aggregate payment obligations of less than $25,000, promissory note, agreement,
      or promise to pay, or indenture relating to the borrowing of money or to
      mortgaging, pledging, or otherwise placing a lien, security interest, or other
      charge or encumbrance on any of its assets, other than Permitted
      Liens;




(iii)  agreement
      with respect to the lending or investing of funds, other than agreements entered
      into in the ordinary course of business and consistent with past practice
      regarding cash management and involving not more than $20,000 in the
      aggregate;




(iv)  license
      or royalty agreements, other than off-the-shelf software and agreements with
      customers in the ordinary course of business and consistent with past
      practice;




(v)  guaranty
      of indebtedness or liability of any other person or entity;




(vi)  lease
      or
      agreement under which it is lessee of, or holds or operates, any personal
      property owned by any other party that involves annual payments of more than
      $25,000;




(vii)  lease
      or
      agreement under which it is lessor of or permits any third party to hold or
      operate any property, real or personal, owned or controlled by it;




(viii)  contract
      or group of related contracts with the same party for the purchase by it of
      supplies, products, or other personal property or for the furnishing or receipt
      of services that involves a sum in excess of $25,000;




(ix)  contract
      that prohibits or purports to prohibit it or any of its affiliates from freely
      engaging in business anywhere in the world or grants exclusive rights, whether
      in a particular territory or worldwide;




(x)  contract
      relating to the distribution, marketing, or sale of its products or services,
      other than any contract that can be terminated by the Company or the UK
      Subsidiary on fewer than 90 days’ notice (without penalty or other termination
      payment obligation) and involves annual payments of not more than
      $25,000;


24


(xi)  warranty
      agreement with respect to products or services sold or licensed, other than
      in
      the ordinary course of business, consistent with past practice, and using the
      standard form agreement ordinarily used by the Company);




(xii)  franchise
      agreement and license agreement, other than in the ordinary course of business
      and consistent with past practice;




(xiii)  agreement,
      contract, or understanding pursuant to which it engages independent contractors,
      other than any contract that can be terminated by the Company or the UK
      Subsidiary on fewer than 90 days’ notice (without penalty or other termination
      payment obligation), involves annual payments of not more than $25,000, and
      was
      entered into in the ordinary course of business consistent with past practice;
      or




(xiv)  other
      agreement that involves annual payments in excess of $25,000 and cannot be
      terminated by the Company or the UK Subsidiary on fewer than 90 days’ notice
      (without penalty or other termination payment obligation).




(b)  As
      of the
      date of this agreement, except as set forth in schedule 5.21, none of the
      Specified Senior Employees has any Knowledge of any material breach or
      anticipated material breach by any other party to any agreement required to
      be
      set forth in schedule 5.21.






(c)  The
      Parent has been provided with a true and correct copy of each written agreement
      referred to in schedule 5.21, together with all amendments, waivers, or other
      changes to those agreements. Schedule 5.21 contains an accurate and complete
      description of all material terms of all oral contracts and agreements referred
      to in that schedule.





Section
      5.22  Books
      and Records .  The
      books
      of account, stock record books, and similar records of the Company and the
      UK
      Subsidiary are complete and correct in all material respects and have been
      maintained in accordance with sound business practices. The minute books of
      each
      of the Company and the UK Subsidiary contain accurate and complete records
      of
      all meetings of, and corporate action taken by, the shareholders, the board
      of
      directors, and committees of the board of directors, except where the failure
      to
      adequately maintain such books and records would not have an adverse effect
      on
      the Company or the UK Subsidiary.




Section
      5.23  Bank
      Accounts .  Schedule
      5.23 sets forth the names and locations of all banks, trust companies, savings
      and loan associations and other financial institutions at which the Company
      or
      the UK Subsidiary maintains safe deposit boxes or accounts of any nature and
      the
      names of all persons authorized to draw thereon, make withdrawals therefrom
      or
      have access thereto. At the Closing, the Company will deliver to the Parent
      copies of all records, including all signature or authorization cards,
      pertaining to such bank accounts.




Section
      5.24  Shareholder
      Communications .  None
      of
      the information supplied or to be supplied by the Company to its shareholders
      in
      connection with the shareholders’ approval of the transactions contemplated by
      this agreement contains any untrue statement of a material fact or omits to
      state any material fact required to be stated therein or necessary in order
      to
      make the statements therein, in light of the circumstances under which they
      are
      made, not misleading.


25


Section
      5.25  Brokers .  Except
      as
      set forth in schedule 5.25, which contains a true and correct description of
      the
      terms of the Company’s engagement of Verto Group LLC, no broker, finder, or
      financial advisor is entitled to any brokerage, finder's, or other fee or
      commission in connection with the Merger or the transactions contemplated by
      this agreement based upon arrangements made by or on behalf of the Company
      or
      any of the Shareholders.




**ARTICLE
      VI**





**COVENANTS**





Section
      6.1  Conduct
      of Business Pending the Merger .
      Prior
      to the Effective Time, unless the Parent otherwise agrees in writing, or as
      may
      be expressly permitted pursuant to this agreement:




(a)  the
      businesses of the Company and the UK Subsidiary will be conducted only in the
      ordinary and usual course of business and consistent with past practices, and
      there will be no material changes in the conduct of their
      operations;




(b)  the
      Company will not (i) amend its certificate of incorporation or bylaws; or (ii)
      split, combine, or reclassify any shares of its outstanding capital stock or
      declare, set aside, or pay any dividend or other distribution payable in cash,
      stock, or property, or redeem or otherwise acquire any shares of its capital
      stock;




(c)  except
      as
      set forth on schedule 6.1(c), neither the Company nor the UK Subsidiary will
      (i)
      authorize for issuance, issue, or sell or agree to issue or sell any additional
      shares of, or rights of any kind to acquire any shares of, its capital stock
      of
      any class (whether through the issuance or granting of options, warrants,
      commitments, subscriptions, rights to purchase, or otherwise); (ii) acquire,
      dispose of, transfer, lease, license, mortgage, pledge, or encumber any fixed
      or
      other assets, other than in the ordinary course of business and consistent
      with
      past practices; (iii) incur, assume, or prepay any indebtedness or any other
      material liabilities, other than in the ordinary course of business and
      consistent with past practices; (iv) assume, guarantee, endorse, or otherwise
      become liable or responsible (whether directly, contingently, or otherwise)
      for
      the obligations of any other person; (v) make any loans, advances, or capital
      contributions to, or investments in, any other person; (vi) authorize any
      capital expenditure; (vii) permit any insurance policy naming the Company or
      the
      UK Subsidiary as a beneficiary or a loss payee to be cancelled or terminated;
      (viii) make any Tax election or settle or compromise any Tax liability that
      could increase Taxes payable by the Company or the UK Subsidiary on or after
      the
      Closing Date; (ix) change its fiscal year; (x) change its methods of accounting
      (including, without limitation, make any material write-off or reduction in
      the
      carrying value of any assets); or (xi) enter into any contract, agreement,
      commitment, or arrangement with respect to any of the
      foregoing;


26


(d)  each
      of
      the Company and the UK Subsidiary will use its best efforts to preserve intact
      its business organization, to keep available the services of its present key
      employees, and to preserve the goodwill of those having business relationships
      with it;




(e)  neither
      the Company nor the UK Subsidiary will enter into any new employment agreements
      with any of its officers or employees or grant any increases in the compensation
      of its officers or employees, or enter into, adopt, or amend any Plan;
      and




(f)
      the
      UK Subsidiary, in its capacity as a shareholder of the Spanish Subsidiary,
      will
      not take any action in respect of the Spanish Subsidiary inconsistent with
      clauses (a) through (e) above, *mutatis
      mutandis* .




Section
      6.2  Access
      and Information .
      Upon
      reasonable notice, the Company shall afford to the Parent and its financial
      advisors, legal counsels, accountants, consultants, financing sources, and
      other
      representatives full access during normal business hours throughout the period
      prior to the Effective Time to all of its and the UK Subsidiary’s books,
      records, properties, and personnel (including those related to the Spanish
      Subsidiary held by the Company or the UK Subsidiary), and, during such period,
      will furnish promptly to the Parent all information as the Parent may reasonably
      request; provided that no investigation pursuant to this section 6.2 will affect
      any representations or warranties made in this agreement or the conditions
      to
      the obligations of the respective parties to consummate the Closing; provided,
      further, that (a) the activities of the Parent and its agents will be conducted
      in such a manner as not to interfere unreasonably with the operation of the
      business of the Company, and (b) in no event will the Company be required to
      furnish any information that it reasonably demonstrates to the Parent or the
      Parent’s counsel it is prohibited from disclosing by legal requirement, order,
      or contract. Prior to the Effective Time and subject to any obligation to
      disclose pursuant to any applicable law or regulation, the Parent will hold
      in
      confidence all nonpublic information until such time as such information is
      otherwise publicly available and, if this agreement is terminated, the Parent
      will either destroy or deliver to the Company all documents, work papers, and
      other material (including copies) obtained by such party or on its behalf from
      the other party as a result of this agreement or in connection herewith, whether
      so obtained before or after the execution of this agreement.





Section
      6.3  Proxies;
      Shareholder Approvals





(a)  The
      Company, acting through its board of directors, shall, immediately after the
      execution and delivery of this agreement and in accordance with applicable
      law
      and its certificate of incorporation and bylaws:


27


(i)  submit
      for approval and adoption by the Company’s shareholders, by written consent in
      lieu of meeting, this agreement and the Merger and shall use its best efforts
      to
      obtain such approval; and





(ii)  recommend
      approval and adoption of this agreement and the Merger by the Company’s
      shareholders and take all lawful action to obtain such approval.





(b)  Each
      Principal Shareholder hereby agrees (i) to vote all of that Principal
      Shareholder’s Shares in favor of this agreement, or to vote all shares
      beneficially held by such Principal Shareholder in favor of the agreement,
      and
      the Merger in the meeting or written consent contemplated by clause (a)(i)
      above, and to vote against any proposal inconsistent with the foregoing, and
      (ii) not to sell, otherwise dispose of, hypothecate, pledge, or give a proxy
      or
      right to vote with respect to any Shares.




(c)  In
      connection with the submission of this agreement and the Merger for approval
      by
      the Company’s shareholders pursuant to section 6.3(a)(i), the Company shall
      furnish each such shareholder a true and correct copy of a draft of this
      agreement dated August 16, 2007 (excluding schedules and exhibits).




Section
      6.4  Public
      Announcements .
      The
      Parent may issue press releases or otherwise make public statements or respond
      to press inquiries with respect to this agreement or the transactions
      contemplated by this agreement. Neither Verto Group LLC, nor the Company nor
      any
      of the Principal Shareholders shall issue any press release or otherwise make
      any public statement or respond to any press inquiry with respect to this
      agreement or the transactions contemplated by this agreement without the prior
      approval of the Parent, except as may be required by law.




Section
      6.5  Expenses .
      Whether
      or not the Merger is consummated, all costs and expenses incurred in connection
      with this agreement and the transactions contemplated hereby, including, without
      limitation, fees and disbursements of counsel, financial advisors, and
      accountants, will be paid by the party incurring such costs and expenses.
      Notwithstanding the foregoing, the Principal Shareholders agree that the costs
      and expenses of the Company incurred in connection with this agreement and
      the
      transactions contemplated hereby will be included in Fees and Expenses and
      therefore deducted from the Initial Merger Consideration.




Section
      6.6  Additional
      Agreements .
      Each
      party agrees to use all reasonable efforts to take, or cause to be taken, all
      actions and to do, or cause to be done, all things necessary, proper, or
      advisable under applicable laws and regulations to consummate and make effective
      the transactions contemplated by this agreement, including using all reasonable
      efforts to obtain all necessary waivers, consents, and approvals and to effect
      all necessary registrations and filings. For purposes of this section 6.6,
      however, the term “all reasonable efforts” shall not be deemed to require the
      payment of any cash or other consideration by any party, except as expressly
      set
      forth in this agreement. In case at any time after the Effective Time any
      further action is necessary or desirable to carry out the purposes of this
      agreement, the Principal Shareholders and the proper officers and directors
      of
      the Parent, the Sub, and the Company shall take all such necessary
      action.


28


Section
      6.7  Notices
      of Certain Events .
      Prior
      to the Effective Time, the Company and the Principal Shareholders shall promptly
      notify the Parent in writing of:




(a)  any
      notice or other communication received by the Company or any Principal
      Shareholder from any person alleging that the consent of such person is or
      may
      be required in connection with the transactions contemplated by this
      agreement;




(b)  any
      notice or other communication received by the Company or any Principal
      Shareholder relating to the transactions contemplated by this agreement and
      any
      other significant notices or other communications from any Governmental
      Authority; and




(c)  any
      actions, suits, claims, investigations, or proceedings commenced or, to the
      Specified Senior Employees’ Knowledge, threatened against, the Company or the UK
      Subsidiary.




Section
      6.8  Supplemental
      Disclosure .
      From
      time to time prior to the Closing, the Principal Shareholders shall promptly
      supplement the disclosure schedules to this agreement with respect to any facts,
      events, or circumstances hereafter arising, existing, or occurring and that,
      if
      arising, existing, or occurring on or before the date of this agreement, would
      have been required to be set forth or described in the schedules to Article
      V
      (each, a “Disclosure Supplement”). If the Parent elects to consummate the
      Merger, notwithstanding any such Disclosure Supplement, the schedules are deemed
      amended and supplemented by all information set forth in each Disclosure
      Supplement, and Article V is deemed amended and supplemented by all such
      information set forth in the Disclosure Supplement, as if amended on the date
      of
      the parties’ execution of this agreement. Except as expressly set forth in this
      section 6.8, nothing in this section 6.8 shall affect the rights of the Parent
      or the Sub under Article VII or VIII or otherwise under this agreement.




Section
      6.9  Parent’s
      Credit Line .  The
      Parent shall make available, or cause to be made available, to the Company
      from
      time to time during the period from the Effective Time through December 31,
      2009, a revolving line of credit of up to $1,700,000 (the “Revolver”). The
      Company may draw on the Revolver from time to time in its reasonable discretion,
      subject to the conditions that (a) the proceeds of the Revolver shall be applied
      in a manner consistent with the Company’s budget as in effect at the time the
      Revolver is drawn upon, and (b) the Company’s cash and cash equivalents,
      immediately after giving effect to a drawdown, not exceed $500,000. The Revolver
      shall be repaid in full on December 31, 2009. The Revolver shall bear interest
      on the principal amount outstanding from time to time at a rate equal to the
      one-year London interbank offered rate for U.S. dollars from time to time (as
      quoted from time to time in the internet website of Bank Leumi Le’Israel). The
      Revolver shall be subject to such other terms and conditions as the Parent
      may
      reasonably determine from time to time and that are not less favorable to the
      Company than those in comparable loans by unaffiliated commercial banks. In
      calculating Net Profit and Net Loss, all fees and other expenses (including
      interest) under the Revolver shall be excluded.


29


Section
      6.10  Non-Competition .  Each
      of
      Anne Ferguson and Eduardo Ross agrees that, until six months following the
      termination of his or her employment with the Company, except on behalf of
      the
      Company or the UK Subsidiary, he or she will not, directly or indirectly, serve
      as an officer, director, stockholder, employee, partner, proprietor, joint
      venturer, associate, representative, or consultant of any other person,
      corporation, firm, partnership, or other entity whatsoever known by him or
      her
      to compete directly or indirectly with the Company or its subsidiaries, anywhere
      in the world, in any line of business engaged in (or planned to be engaged
      in)
      by the Company or its subsidiaries; provided, however, that he or she may
      purchase or otherwise acquire up to (but not more than) one percent (1%) of
      any
      class of securities of any enterprise (but without participating in the
      activities of such enterprise), if such securities are listed on any national
      or
      regional securities exchange or have been registered under section 12(g) of
      the
      Securities Exchange Act of 1934. Each of Anne Ferguson and Eduardo Ross (a)
      acknowledges that a breach of this section 6.10 by him or her would irreparably
      damage the Company and monetary damages would not constitute an adequate remedy
      for any such breach, and agrees that the Parent, on its own behalf or on behalf
      of the Company, shall be entitled to an injunction or decree of specific
      performance by any court of competent jurisdiction to enforce an actual of
      threatened breach of this section 6.10 by him or her, without any bond or other
      security required.




**ARTICLE
      VII**





**CONDITIONS
      TO CLOSING**





Section
      7.1  Conditions
      to Each Party’s Obligation to Effect the Closing .
      The
      respective obligations of each party to effect the Closing will be subject
      to
      the satisfaction at or prior to the Closing of the following
      conditions:







(a)  This
      agreement, the Merger, and the transactions contemplated by this agreement
      shall
      have been approved and adopted by the requisite vote of the Shareholders of
      the
      Company in accordance with applicable law.




(b)  No
      preliminary or permanent injunction or other order by any federal or state
      court
      in the United States that prohibits the consummation of the Merger shall have
      been issued and remain in effect.




(c)  The
      Escrow Agreement is in full force and effect.


30


Section
      7.2  Conditions
      to Obligation of the Company to Effect the Closing .
      The
      obligations of the Company to effect the Closing shall be subject to the
      satisfaction at or prior to the Closing of the following additional
      conditions:




(a)  Each
      of
      the Parent and the Sub shall have performed such party’s obligations under this
      agreement required to be performed by it at or prior to the Closing and the
      representations and warranties of the Parent and the Sub in this agreement
      shall
      be true and correct in all material respects at and as of the Closing as if
      made
      at and as of such time, and the Company shall have received a certificate of
      an
      executive officer of the Parent as to the satisfaction of this
      condition.




(b)  There
      shall be no action, suit or other proceeding against the Parent or the Sub
      that
      is pending or threatened pertaining to this agreement or the consummation of
      the
      transactions contemplated by this agreement.




Section
      7.3  Conditions
      to Obligations of the Parent and the Sub to Effect the Closing .
      The
      obligations of the Parent and the Sub to effect the Closing shall be subject
      to
      the satisfaction at or prior to the Closing of the following additional
      conditions:




(a)  The
      Company and each Principal Shareholder shall have performed that party’s
      obligations under this agreement required to be performed by it at or prior
      to
      the Closing and the representations and warranties of the Company and the
      Principal Shareholders in this agreement shall be true and correct in all
      material respects at and as of the Closing as if made at and as of such time,
      and the Parent and the Sub shall have received a certificate of the president
      of
      the Company as to the satisfaction of this condition.




(b)  Since
      the
      date of this agreement, there shall have occurred no material adverse change
      in
      the Company or the UK Subsidiary or its respective business or prospects or
      discovery of a condition or occurrence of any event that would be reasonably
      likely to result in such a material adverse change.




(c)  All
      consents of third parties described in this agreement or any schedules to this
      agreement necessary to consummate the transactions contemplated by this
      agreement shall have been obtained.




(d)  There
      shall be no action, suit or other proceeding against the Company that is pending
      or threatened pertaining to this agreement or the consummation of the
      transactions contemplated by this agreement.




(e)  The
      Company shall have received resignations from such officers of the Company
      as
      the Parent shall designate prior to the Closing Date.




(f)  Each
      Employment Agreement is in full force and effect.


31


(g)  This
      agreement, the Merger, and the transactions contemplated by this agreement
      shall
      have been approved by holders of, or beneficial owners holding, not fewer than
      84% of the Shares entitled to vote thereon.




**ARTICLE
      VIII**





**SURVIVAL
      AND INDEMNIFICATION**





Section
      8.1  Survival .  The
      representations and warranties of the parties shall survive the execution and
      delivery of this agreement and the consummation of the transactions contemplated
      by this agreement for a period of three (3) years, regardless of any
      investigation made by or on behalf of any party; provided, however, that the
      representations and warranties set forth in sections 5.1 through 5.4 and 5.25
      shall survive indefinitely, regardless of any investigation made by or on behalf
      of any party; and further provided, however, that the representations and
      warranties set forth in section 5.19 shall survive until 90 days after the
      expiration of all applicable statutes of limitations in respect of Taxes,
      regardless of any investigation made by or on behalf of any party.




Section
      8.2  Indemnification
      by the Principal Shareholders




(a)  Subject
      to the limitations, conditions, and restrictions set forth in this agreement,
      the Principal Shareholders shall jointly and severally indemnify and defend
      the
      Parent and its affiliates, officers, directors, employees, and agents
      (including, without limitation, those retained in connection with the
      transactions contemplated by this agreement) (collectively, the “Parent
      Indemnified Parties”) and hold them harmless from and against any and all
      losses, liabilities, damages, and expenses of or against the Parent Indemnified
      Parties, including, for the sake of clarity, those of the Company (including
      reasonable attorneys’ fees and expenses) to the extent resulting from or arising
      out of (a) any breach by the Company prior to the Effective Time of any
      covenant, representation, or warranty in this agreement, or any breach by the
      Principal Shareholders at any time of any covenant, representation, or warranty
      in this agreement, or (b) any appraisal or other proceeding brought by or on
      behalf of any Shareholder in respect of any fact, event, or circumstance
      arising, occurring, or existing prior to or on the Effective Time (including,
      without limitation all Pre-Merger Company Liabilities), or in respect of any
      dispute regarding the authority or actions by or on behalf of the Representative
      under Article X or otherwise (provided, however, that nothing in this subsection
      (b) is intended to limit or restrict the right of the Representative to take
      any
      act permitted under this agreement and not in contravention of applicable law
      or
      the rights of any Shareholder).




(b)
      Subject to sections 8.5(b), the Principal Shareholders shall jointly and
      severally indemnify the Parent Indemnified Parties in an amount equal to the
      Accounts Receivable Deficit (as defined below). As used in this agreement,
      the
      term “Accounts Receivable Deficit’ means the aggregate amount, if any, of the
      accounts receivable listed on schedule 8.2 that shall not have been collected
      on
      or before the earlier of January 31, 2008 or (ii) the date the Parent’s
      consolidated financial statements are prepared (assuming, for these purposes,
      that amounts collected from a particular account debtor shall be applied to
      that
      account debtor’s receivables in the order in which such receivables arose,
      unless the account debtor shall have specified otherwise in writing to the
      Company or the UK Subsidiary).


32


(c)  Subject
      to sections 8.5(b), the Principal Shareholders shall jointly and severally
      indemnify the Parent Indemnified Parties in an amount equal to the GAAP Deficit
      (as defined below). As used in this agreement, the term “GAAP Deficit’ means an
      amount equal to (i) the sum of (A) the amount, if any, by which $6,833,449
      exceeds the Company’s consolidated revenues (determined in accordance with GAAP
      consistently applied) in the 12 months ended June 30, 2007, plus (B) the amount,
      if any, by which expense (excluding depreciation and amortization, but
      including, without limitation, accruals for liabilities for all
      Plans) **** reflected
      in any Company Financial Statement is less than the amount of aggregate expense
      that would have been reflected therein, if that Company Financial Statement
      had
      been prepared in accordance with GAAP consistently applied, reduced by (ii)
      the
      general reserve for expenses of $104,000 reflected therein.




Section
      8.3  Indemnification
      by the Parent .
      Subject
      to the limitations, conditions, and restrictions set forth in this agreement,
      the Parent, the Sub, and their respective successors and assigns shall jointly
      and severally indemnify the Shareholders and hold them harmless from and against
      any and all losses, liabilities, damages, and expenses of the Shareholders
      (including reasonable attorneys’ fees and expenses) to the extent resulting from
      or arising out of any breach of any covenant, representation, or warranty made
      by the Parent or the Sub in this agreement.




Section
      8.4  Procedure
      Relative to Indemnification .




(a)  In
      the
      event that any party hereto claims that it is entitled to be indemnified,
      defended, or held harmless pursuant to the terms of this Article 8 (each, a
      “Claim”), such party (the “Claiming Party”) will promptly notify the party or
      parties against which the claim is made (the “Indemnifying Party”) in writing (a
“Claim Notice”) of such Claim promptly after the Claiming Party receives notice
      of any action, Proceeding, demand, or assessment or otherwise has received
      notice of any claim of a third party (a “Third-Party Claim”) that may reasonably
      be expected to result in a Claim by the Claiming Party against the Indemnifying
      Party. The Claim Notice will specify the breach of representation, warranty,
      agreement, or covenant claimed by the Claiming Party and the losses incurred
      by,
      or imposed upon, the Claiming Party on account thereof. If such losses are
      liquidated in amount, the Claim Notice will so state, and such amount is deemed
      the amount of the Claim of the Claiming Party. If the amount is not liquidated,
      the Claim Notice will so state, and in such event a Claim is deemed asserted
      against the Indemnifying Party on behalf of the Claiming Party, but no payment
      will be made on account thereof (except for reasonable attorneys’ fees and
      expenses) until the amount of such claim is liquidated and the Claim is finally
      determined.




(b)  With
      respect to Claims of the Claiming Party based upon a Third-Party Claim
      (including any form of proceeding filed or instituted by any governmental body),
      the Indemnifying Party has the right, upon receipt of the Claim Notice and
      at
      its expense, to defend such Third-Party Claim in its own name or, if necessary,
      in the name of the Claiming Party. The Claiming Party will cooperate with and
      make available to the Indemnifying Party such assistance and materials as may
      be
      reasonably requested of the Claiming Party, and the Claiming Party has the
      right, at the Claiming Party’s expense, to participate in the defense. The
      Indemnifying Party has the right to settle and compromise such Third-Party
      Claim
      only with the consent of the Claiming Party (which consent may not be
      unreasonably withheld or delayed) unless there is no finding or admission of
      any
      violation of legal requirements or any violation of the rights of any person
      and
      no affect on any other Claims that may be made against the Claiming Party,
      and
      the sole relief provided is monetary damages that are paid in full by the
      Indemnifying Party.


33


(c)  Upon
      receipt of a Claim Notice that does not involve a Third-Party Claim, the
      Indemnifying Party has thirty (30) days from the receipt of such Claim Notice
      to
      notify the Claiming Party that the Indemnifying Party disputes such Claim.
      If
      the Indemnifying Party does not timely notify the Claiming Party of such
      dispute, then the amount of such Claim is deemed, conclusively, a liability
      of
      the Indemnifying Party hereunder. If the Indemnifying Party does timely notify
      the Claiming Party of such dispute, then the Claiming Party has thirty (30)
      days
      to respond in a written statement to the objection of the Indemnifying Party.
      If
      after such thirty (30)-day period there remains a dispute as to any such Claim,
      then the Claiming Party and the Indemnifying Party will attempt in good faith
      for a period not to exceed thirty (30) additional days to agree upon the rights
      of the respective parties with respect to such Claim. If the parties should
      so
      agree, a memorandum setting forth such agreement will be prepared and signed
      by
      the Parent and the Representative. If the parties do not agree within such
      additional thirty (30)-day period, then the Claiming Party may pursue any and
      all other remedies available to it hereunder.




(d)  Once
      the
      amount of any Claim under this Article 8 is finally determined, the Claiming
      Party is entitled to pursue each and every remedy available to it at law or
      in
      equity to enforce the indemnification provisions of this Article 8 and, in
      the
      event it is determined, or the Indemnifying Party agrees, that it is obligated
      to indemnify the Claiming Party for such Claim, the Indemnifying Party agrees
      to
      pay all costs, expenses and fees, including all reasonable attorneys’ fees which
      may be incurred by the Claiming Party in attempting to enforce indemnification
      under this Article 8, whether the same is enforced by suit or otherwise which
      the Indemnifying Party and the Claiming Party agree are due to the Claiming
      Party or which a court, arbitrator or other judicial body determines are due
      to
      the Claiming Party. In the event that it is determined, or that the Claiming
      Party agrees, that the Indemnifying Party is not obligated to indemnify the
      Claiming Party for such Claim, the Claiming Party will pay all costs, expenses
      and fees, including reasonable attorneys’ fees, which may have been incurred by
      the Indemnifying Party in defending or disputing the Claim by the Claiming
      Party
      under this Article 8.




(e)  For
      purposes of this section 8.4 and subject to Article 10, the Representative
      will
      act on behalf of the Principal Shareholders.


34


Section
      8.5  Limits
      on Indemnification




(a)    Notwithstanding
      anything contained in this agreement to the contrary, the Principal Shareholders
      shall not be obligated to indemnify, defend, or hold harmless any Parent
      Indemnified Party with respect to any losses from any Claim for
      misrepresentation or breach of warranty, unless and until the aggregate losses
      from such Claims exceed $100,000, at which point the Parent Indemnified Parties
      may recover the full amount of losses from dollar one.





(b) **** Notwithstanding
      anything contained in this agreement to the contrary (including, without
      limitation, the joint and several liability of the Principal Shareholders under
      section 8.2), in no event shall any Principal Shareholder’s aggregate liability,
      at a particular time, for losses from all Claims for misrepresentation and
      breach of warranty, pursuant to article 8 or otherwise, exceed, in the
      aggregate, an amount equal to the sum of (i) the aggregate amount of the Merger
      Consideration theretofore paid or distributed to that Principal Shareholder
      (or
      his or her assignees or transferees) plus (ii) the aggregate amount of all
      dividends and distributions referred to in section 5.6(a)(11) theretofore paid
      or distributed to that Principal Shareholder (or his or her assignees or
      transferees).




(c)  As
      a
      condition to any Indemnifying Party’s obligation to indemnify, defend or hold
      harmless any Claiming Party, such Claiming Party must have taken and caused
      its
      affiliates to take all commercially reasonable steps to mitigate any losses
      upon
      becoming aware of any event that gives rise thereto consistent with such
      Claiming Party’s past practices.




(d)  No
      Parent
      Indemnified Party may recover duplicative losses in respect of a single set
      of
      facts or circumstances under more than one representation or warranty in this
      agreement regardless of whether such facts or circumstances would give rise
      to a
      breach of more than one representation or warranty in this
      agreement.




(e)  Notwithstanding
      anything contained in this agreement to the contrary, no person or entity will
      be liable to any other person or entity for any exemplary or punitive damages
      of
      such other person or entity; provided, however, nothing in this section 8.5(e)
      shall be deemed to limit or otherwise affect the Parent
      Indemnified Parties’ right to indemnification under this agreement for any loss,
      liability, damage, or expense arising out of a Third Party Claim for such
      damages; and provided that no party may claim consequential or incidental
      damages arising out of a breach of the representations set forth in section
      5.5.




Section
      8.6  Sole
      Remedy .
      The
      sole remedy of any Claiming Party for any and all monetary claims with respect
      to this agreement and the transactions contemplated hereby (except in the case
      of intentional fraud) is as set forth in this article 8, and no person or entity
      has any other entitlement, remedy, or recourse, whether in contract, tort or
      otherwise, against the other parties with respect to the transactions
      contemplated hereby, all of such remedies, entitlements, and recourse being
      expressly waived by the parties hereto to the fullest extent permitted by legal
      requirements.




Section
      8.7. No
      Implied Representations or Warranties .
      Except
      as expressly set forth in this agreement, none of the parties has made any
      representation or warranty to any other party in connection with the
      transactions contemplated by this agreement.


35


**Section
      8.8**  **Contribution
      Among Principal Shareholders** **.** If
      any
      Claim is made by a Parent Indemnified Party against one or more Principal
      Shareholders, each Principal Shareholder agrees, upon notice from such other
      Principal Shareholder, to directly contribute **** that
      Principal Shareholder’s Pro Rata Share of any payments made to the Parent
      Indemnified Party in connection with such Claim and, if applicable, to reimburse
      (up to that Principal Shareholder’s Pro Rata Share) any Principal Shareholder
      that was required to pay more than his or her Pro Rata Share of any such
      Claim.  For purposes of this section 8.8, with respect to payments made in
      connection with any Claim, each Principal Shareholder’s “Pro Rata Share”, at a
      particular time, means the percentage of the total Merger Consideration
      theretofore paid or distributed to all Principal Shareholders represented by
      the
      amount of Merger Consideration theretofore paid or distributed to such Principal
      Shareholder. Each Principal Shareholder agrees that failure to pay that
      Principal Shareholder’s Pro Rata Share within ten (10) business days of notice
      thereof shall entitle the noticing Principal Shareholder to have all
      attorney's fees and other costs of enforcing the contribution obligation paid
      to
      it by the noticed Principal Shareholder.





**ARTICLE
      IX**





**TERMINATION,
      AMENDMENT AND WAIVER**





Section
      9.1  Termination .
      This
      agreement may be terminated at any time prior to the Closing, whether before
      or
      after approval by the Shareholders of the Company:




(a)  by
      mutual
      consent of the Parent and the Company;




(b)  by
      the
      Parent or the Company, if the Closing shall not have been consummated on or
      before August 16, 2007;




(c)  by
      the
      Company, if any of the conditions specified in section 7.1 or 7.2 has not been
      fulfilled or waived by the Company on or before August 16, 2007; or




(d)  by
      the
      Parent, if any of the conditions specified in section 7.1 or 7.3 has not been
      fulfilled or waived by the Parent on or before August 16, 2007.




Section
      9.2  Effect
      of Termination .
      In the
      event of termination of this agreement under section 9.1, this agreement will
      forthwith become void and, except for a termination resulting from a breach
      of
      warranty or agreement, or misrepresentation, by a party, there will be no
      liability on the part of any party.




Section
      9.3  Waiver .
      At any
      time prior to the Closing, the parties may (a) extend the time for the
      performance of any of the obligations or other acts of the other parties, (b)
      waive any inaccuracies in the representations and warranties contained in this
      agreement, and (c) waive compliance with any agreement or any condition.
      Any agreement on the part of a party to any such extension or waiver will be
      valid only if set forth in an instrument in writing signed on behalf of that
      party.


36


**ARTICLE
      X**





**REPRESENTATIVE**





Section
      10.1  Appointment
      of the Representative .
      By
      approval and adoption of this agreement, each Shareholder hereby irrevocably
      appoints a committee comprised of Stuart Simke, Anne Ferguson and Phil
      Holthouse, and their duly appointed successors, as its, his or her true and
      lawful attorney-in-fact and agent (the “ Representative ”),
      with
      full power of substitution or resubstitution, to act on behalf of such
      Shareholder in any disputes involving this agreement, to do or refrain from
      doing all such further acts and things, and to execute all such documents as
      the
      Representative deems necessary or appropriate in connection with the
      transactions contemplated hereby, including the power:




(a)  to
      act
      for such Shareholder and the Company with regard to Claims, including the power
      to compromise any Claim on behalf of such Shareholder and to transact matters
      of
      litigation, and to act for such Shareholder under the Escrow
      Agreement;




(b)  to
      execute and deliver all amendments, waivers, ancillary agreements, certificates
      and documents that the Representative deems necessary or appropriate in
      connection with the consummation of the Merger;




(c)  to
      receive funds, make payments of funds, and give receipts for funds;




(d)  to
      receive funds for the payment of expenses of such Shareholder and apply such
      funds in payment for such expenses; and




(e)  to
      do or
      refrain from doing any further act or deed on behalf of such Shareholder that
      the Representative deems necessary or appropriate in its sole discretion
      relating to the subject matter of this agreement as fully and completely as
      such
      Shareholder could do if personally present.


37


Section
      10.2  Other
      Powers and Duties of the Representative .
      The
      Representative will act as a committee, and all decisions of the Representative
      will be made by the affirmative consent of a majority of its members at a
      meeting (in person or telephonic) or the unanimous written consent of the
      members (which may be evidenced by e-mail correspondence). Each member of the
      Representative is free to resign and is entitled to appoint his or her
      successor. If, for any reason, there cease to be any members of the
      Representative, and the Parent shall have given the Principal Shareholders
      notice of the fact that a decision of the Representative is then required,
      then
      a majority of the Principal Shareholders shall, within 21 days of such notice,
      give the Parent notice of who thereafter shall serve as members of the
      Representative (it being understood and agreed that, if the Principal
      Shareholders fail to give the Parent such notice, then and thereafter, until
      such notice is given, the Parent may, at its option, take any action under
      this
      agreement that would require the consent or approval of the Representative,
      without the consent or approval of any Shareholder or other third party, and
      such action shall not be deemed a breach of this agreement solely by virtue
      thereof). The appointment of the Representative is deemed coupled with an
      interest and is irrevocable, and the parties hereto and any other person or
      entity may conclusively and absolutely rely, without inquiry, upon any action
      of
      the Representative in all matters referred to herein. Any action taken by the
      Representative will be in writing and will be signed by any member of the
      Representative. The Shareholders hereby confirm and ratify all that the
      Representative does or causes to be done by virtue of its appointment as the
      representative of the Shareholders hereunder. The Representative will act for
      the Shareholders on all of the matters set forth in this agreement in the manner
      the Representative believes to be in the best interest of the Shareholders,
      and
      consistent with the obligations of the Shareholders under this Agreement, but
      the Representative is not responsible to the Shareholders for any loss or
      damages which the Shareholders may suffer by the performance of the
      Representative’s duties under this Agreement, other than loss or damages arising
      from willful violation of any legal requirement, bad faith or fraud in the
      performance of such duties under this agreement and in no event does any such
      losses or damages include consequential, incidental, indirect, special,
      exemplary or punitive losses or damages of any kind whatsoever. The
      Representative does not have any duties or responsibilities except those
      expressly set forth in this agreement, and no implied covenants, functions,
      responsibilities, duties, obligations or liabilities are read into this
      agreement or otherwise exist against the Representative.




Section
      10.3  Reliance
      by the Representative .
      The Representative
      is entitled to rely, and is fully protected in relying, upon any statements
      furnished to it by any party hereto or any other evidence reasonably deemed
      by
      the Representative to be reliable, and the Representative is entitled to act
      on
      the advice of counsel selected by it.




Section
      10.4  Expenses
      of the Representative .
      The Representative
      is entitled to retain counsel and to incur such expenses (including court costs
      and reasonable attorneys’ fees and expenses) as the Representative deems to be
      necessary or appropriate in connection with its performance of its obligations
      under this agreement. In the event that the Representative spends, in the
      aggregate and amongst all persons comprising the Representative, more than
      25
      hours performing its duties hereunder (the “Hour Baseline”), the Representative
      will be entitled to receive, for each hour spent performing its duties hereunder
      (including the first 25 hours), $450.00 per hour (such fees constitute the
      “Representative Fees”). This fee will be recoverable against the Representative
      Escrow Fund (as defined below).




Section
      10.5  Indemnification . Each
      Shareholder hereby agrees ( severally
      but not jointly) to
      indemnify the Representative (in its capacity as such) against, and to hold
      the
      Representative (in its capacity as such) harmless from, its proportionate share
      (based on the Merger Consideration) of any and all losses of whatever kind
      which
      may at any time be imposed upon, incurred by or asserted against the
      Representative in such capacity in any way relating to or arising out of the
      Representative’s action or failure to take action pursuant to this agreement or
      in connection herewith or therewith in such capacity; provided , however ,
      that no
      Shareholder is liable for the payment of any portion of such losses to the
      extent resulting from the bad faith or fraud of the Representative or any
      violation by the Representative of its obligations under this Agreement.


38


Section
      10.6  Survival .
      The
      agreements in this Article 10 survive termination of this
      Agreement.




Section
      10.7  Representative
      Escrow .
      At the
      Effective Time, pursuant to the escrow agreement between the Representative
      and
      the Escrow Agent (the “Representative Escrow Agreement”), the Parent shall
      deposit $250,000 in cash in the Representative Escrow Fund (as defined in the
      Representative Escrow Agreement). The Parent agrees that it will have no rights
      to the Representative Escrow Fund, but for its general rights under Article
      VIII. The Representative Escrow Fund will be used by the Representative, if
      necessary, to fund its costs and expenses incurred in meeting its obligations
      under this agreement. On May 31, 2010, or such earlier date as the
      Representative in its sole discretion determines appropriate, the Representative
      shall cause the Escrow Agent to transfer to the Shareholders’ Representative an
      amount equal to (i) the sum of (A) $250,000 plus (B) interest earned thereon
      under the Representative Escrow Agreement, reduced by (ii) the sum of (A) the
      amount the Representative in its commercially reasonable discretion determines
      is necessary to defend or pursue Claims existing as that time, plus (B) any
      Representative Fees, plus (C) the aggregate amount of any fees payable to the
      Escrow Agent pursuant to the Representative Escrow Agreement (the
“Representative Escrow Distribution”). Within five (5) business days after the
      Representative’s receipt of the Representative Escrow Fund, the Representative
      shall pay each Shareholder an amount per share determined by dividing the amount
      of the Representative Escrow Distribution by the number of Outstanding Shares.




**ARTICLE
      XI**





**GENERAL
      PROVISIONS**





Section
      11.1  Confidentiality
      and Non-Solicitation .
      The
      parties acknowledge and agree that: (a) prior to the Closing, or if this
      agreement is terminated prior to the Closing, the terms and conditions of the
      Confidentiality Agreement dated July __, 2007 among the Parent, the Company,
      and
      Verto Group LLC remains binding on the parties thereto in accordance with its
      terms, and (b) after the Closing, such Confidentiality Agreement shall terminate
      and be of no further force or effect.




Section
      11.2  Notices .  All
      notices, requests, consents, and other communications provided for in this
      agreement shall be in writing and shall be (a) delivered in person,
      (b) transmitted by telecopy, (c) sent by first-class, registered or
      certified mail, postage prepaid, or (d) sent by reputable overnight courier
      service, fees prepaid, to the recipient at the address or telecopy number set
      forth below, or such other address or telecopy number as may hereafter be
      designated in writing by such recipient. Notices shall be deemed given upon
      personal delivery, seven days following deposit in the mail as set forth above,
      upon acknowledgment by the receiving telecopier or one day following deposit
      with an overnight courier service.


39


If
      to the
      Company or a Principal Shareholder, to that party at:




Amalgamated
      Software of North America, Inc.


9901
      West
      IH 10, Suite 1000


San
      Antonio, TX 78230-2256


Attention:
      Anne Ferguson


Facsimile:
      (210) 408-0211





with
      a
      copy to:





Kendall,
      Koening & Oelsner PC


999
      Eighteenth Street


Suite
      1825


Denver,
      Colorado 80202


Facsimile:
      (303) 67209191


Attention:
      Jon Taylor and John Gaddis





If
      to the
      Representative:




Stuart
      Simke


c/o
      Simke, Chodos & Sasaki LLP


Los
      Angeles, CA 90067-1615


Facsimile:
      (310) 203-3866




with
      a
      copy to:





Kendall,
      Koening & Oelsner PC


999
      Eighteenth Street


Suite
      1825


Denver,
      Colorado 80202


Facsimile:
      (303) 67209191


Attention:
      Jon Taylor and John Gaddis




If
      to the
      Parent or the Sub, to it at:




8
      Maskit
      Street


P.O.
      Box
      2062


Herzliya
      46120


Israel


Facsimile:
      972-9-9526111


Attention:
      Chief Financial Officer


40


with
      a
      copy to:




Edward
      W.
      Kerson, Esq.


80
      University Place


Third
      Floor


New
      York,
      NY 10003


Facsimile:
      (212) 675-5794




Section
      11.3  Amendment
      and Waiver .  No
      amendment of any provision of this agreement shall be effective, unless it
      is in
      writing and signed by the party to be charged. Any failure of a party to comply
      with any provision of this agreement may only be waived in writing by the
      parties affected. No such waiver shall operate as a waiver of, or estoppel
      with
      respect to, any subsequent or other failure. No failure by any party to take
      any
      action against any breach of this agreement or default by any other party shall
      constitute a waiver of that party’s right to enforce any provision of this
      agreement or to take any such action .





Section
      11.4  Counterparts .  This
      agreement may be executed in counterparts, each of which shall be deemed an
      original, but all of which together shall constitute one agreement.





Section
      11.5  Headings .  The
      headings of the various sections of this agreement have been inserted for
      reference only and shall not be deemed part of this agreement.




Section
      11.6  Governing
      Law .  This
      agreement shall be governed by and construed in accordance with the law of
      the
      state of New York applicable to agreements made and to be performed wholly
      in
      New York.




Section
      11.7  Consent
      to Jurisdiction **.**  The
      parties irrevocably submit to the exclusive jurisdiction of the New York state
      courts located in the City of New York, the Texas state courts located in the
      city of San Antonio, and the United States courts located in the City of New
      York or the city of San Antonio for the purposes of any action, suit, or
      proceeding arising out of this agreement or any transaction contemplated by
      this
      agreement (and agree not to commence any such action, suit, or proceeding except
      in such courts). The parties further agree that service of any process, summons,
      notice, or document hand delivered or sent in accordance with section 11.2
      shall
      be effective service of process for any action, suit, or proceeding in New
      York
      with respect to any matters to which it or he has submitted to jurisdiction
      as
      set forth in the immediately preceding sentence. The parties irrevocably and
      unconditionally waive any objection to the laying of venue of any action, suit,
      or proceeding referred to above in any of the courts referred to above, and
      hereby further irrevocably and unconditionally waive and agree not to plead
      or
      claim in any such court that any such action, suit or proceeding brought in
      any
      such court has been brought in an inconvenient forum.




Section
      11.8  No
      Third Party Beneficiaries .  Nothing
      in this agreement is intended or shall be construed to confer upon any person
      or
      entity other than the parties to this agreement, a Claiming Party, and the
      other
      Shareholders, and their respective successors or assigns, any rights or remedies
      under or by reason of this agreement.


41


Section
      11.9  Severability.If
      any
      provision of this agreement is held by a court of competent jurisdiction to
      be
      invalid, void, or unenforceable, the remainder of the agreement shall remain
      in
      full force and effect and shall not be affected, impaired, or
      invalidated.




Section
      11.10  General .
      The
      information set forth in the schedules attached hereto refer to the section
      or
      paragraph of this agreement to which such schedule and information is
      responsive, and each such schedule and the information contained therein is
      deemed to have been disclosed with respect to all other sections and paragraphs
      of the agreement, to the extent of the express cross-references in the
      schedules. All capitalized terms used and not otherwise defined in the schedules
      have the same meanings ascribed to such term in this agreement. The schedules
      do
      not vary, change, or alter the literal meaning of the representations and
      warranties of the Principal Shareholders contained in this agreement, but
      reflect exceptions thereto that are responsive to the language of the
      representations and warranties contained in this agreement.




Section
      11.11  Entire
      Agreement .  This
      agreement, the schedules and the other agreements executed and delivered in
      connection with this agreement constitute the entire agreement among the parties
      with respect to their subject matter and supersede all prior arrangements or
      understandings among them.




**[Signature
      Pages Follow]**


42




**PARENT:****BLUEPHOENIX
                SOLUTIONS LTD.****By:**
            **/s/Arik
              Kilman****Name:**
            **Arik
                Kilman****Title:
                CEO****SUB:****ASNA
                TRANSITORY SUB, INC.****By:**
            **/s/****Name:****Title:****COMPANY:****AMALGAMATED
                SOFTWARE OF**
              **NORTH
                AMERICA, INC.****By:**
            **/s/****Name:****Title:**


43





**SHAREHOLDERS’
              REPRESENTATIVE:****By:**
            **/s/Stuart
                Simke****Name:**
            **Stuart
                Simke****By:**
            **/s/Anne
                Feguson****Name:**
            **Anne
                Ferguson****By:**
            **/s/Phil
                Holthouse****Name:**
            **Phil
                Holthouse**


44





**PRINCIPAL
                SHAREHOLDERS:****/s/
                ANNE FERGUSON****ANNE
                FERGUSON****/s/
              **EDUARDO
              ROSS******EDUARDO
                ROSS**


45